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Economic growth boosts German jobs market

NUREMBERG: Economic growth shortened German dole queues in February, the Federal Labour Office said on Wednesday, as unemployment fell for the fifth month in a row.

Unemployment, adjusted for seasonal factors such as bad weather-related lay-offs, fell 34,000 from the previous month to 3.917 million.

Bernhard Jagoda, president of the Labour Office, said the main driver behind the decline in jobless figures was economic growth in Germany.

"Two thirds of the improvement in pan-German jobless figures in February was due to economic growth. The rest was due to other factors," he told reporters in Nuremberg.

Jagoda said his agency might need to revise its annual jobless forecast down if economic growth continued at its current rate.

"If it stays this way then we will perhaps beat our forecast - but then only by a slight margin. It's too early to revise the forecasts publicly but if things continue this way then perhaps we'll revise them," he said.

The figures were in line with the expectations of independent analysts, who had forecast a decline in the unemployment numbers due to economic growth and demographic factors.

"Unemployment has fallen for the fifth consecutive month in February (with a total drop of around 155,000 since last October), confirming that the upturn in Germany's economic conditions is at last feeding through onto the typically lagging labour market," CIBC World Markets said in a research document.

"We also believe that those improving labour market conditions ought to help a relatively sluggish consumer sector," CIBC's Audrey Childe-Freeman said.

Jagoda said he thought the trend in falling unemployment could continue in the current month. "What we expect is that the usual March trend could be somewhat better than one year ago."

The unemployment rate, which is based on unadjusted data, fell to 10.9 percent, compared with 11.0 percent in January.

In the more prosperous western part of the country, the number of people out of work on a seasonally adjusted basis fell to 2.583 million in February from 2.612 million the month before.

In eastern Germany, the number of people out of work fell to 1.334 million on a seasonally adjusted basis from 1.340 million in the previous month.

Jagoda pointed to the fourth quarter of 1999 as the point at which economic growth began to kick in to boost the labour market. "The fourth quarter of 1999 was the turning point for positive development," he said.

The unemployment rate, which is based on unadjusted data, fell to 10.9 percent, compared with 11.0 percent in January.-Reuters