Nuremberg, Germany - German unemployment fell for the third consecutive month in October, the Federal Labour Agency said Thursday, raising hopes that economic recovery could gather pace in the months ahead. The number out of work in Europe's biggest economy dropped by 118,000 to 3.22 million, the labour office said. Analysts had predicted a drop of between 40,000-60,000.
The jobless rate slid from 8 per cent to 7.7 per cent. A year ago, the unemployment rate was 7.2 per cent. In seasonally adjusted terms, the number of jobless was down 26,000 to 3.42 million.
Labour Agency chief Frank-Juergen Weise said the economic crisis had affected the job market, but the situation had eased in recent months.
The October decline is a further sign that the market has so far managed to withstand the fallout from the global economic contraction as Berlin continues to roll out a 85 billion-euro (124-billion- dollar) fiscal stimulus plan.
The new data was released a day after Chancellor Angela Merkel's new coalition of Christian Democrats and Free Democrats took office for a four-year term.
Labour Minister Franz Josef Jung called the figures "encouraging." He said the fallout from the economic crisis was not as bad as expected thanks to measures taken by the government.
"However, the figures do not represent a turning point," said Jung, who served as defence minister in the previous government.
The minister said developments on the labour market showed firms were doing their best to keep their workers at a time of economic crisis. It was important to keep this up, he added.
Until now, government-subsidized short-term work contracts have helped German employers avoid large-scale layoffs as a result of what has been the nation's steepest economic slowdown in a generation.
With Germany having emerged from recession during the second quarter, economists are expecting a solid gain in economic growth in the coming months, which could further help to underpin the labour market in the run-up to the end of the year.
But economists also warn that unemployment could rise next year once the government starts to wind back its anti-crisis spending programme and labour-market support schemes.
This in turn could raise doubts about the prospects of the German economy mounting a sustained recovery with rising job fears and weak wages growth undercutting private consumption.
