[FRANKFURT] German unemployment fell to a record low in January in a sign that Europe's largest economy is gathering momentum.

The jobless rate declined to 5.9 per cent, the lowest level since reunification, as the number of people out of work slid by a seasonally adjusted 26,000 to 2.61 million, data from the Federal Labor Agency in Nuremberg showed on Tuesday.

Economists in a Bloomberg survey had forecast the rate would remain unchanged at six per cent and the number of unemployed would fall by 5,000.

The German economy expanded by about half a per cent in the fourth quarter, with the Bundesbank seeing signs that job creation should continue.

Strengthening momentum in the core of Europe bodes well for the recovery in the euro area, where joblessness remains elevated and energy-price gains push up inflation.

The number of people out of work fell by about 15,000 in western Germany and by 10,000 in the eastern part of the country, the labour agency said.

BLOOMBERG