German unemployment rate declines to 7.2%

Berlin: Germany's unemployment rate slipped to 7.2 per cent in March thanks to a traditional springtime upturn, while the underlying downward trend picked up speed despite a spell of economic weakness, official figures showed yesterday.

The unadjusted jobless rate was down from 7.4 per cent in February, when numbers were pushed up by harsh winter weather, which typically weighs on activity in sectors such as construction.

A total of 3.028 million people were registered as unemployed in Europe's biggest economy — 82,000 fewer than in February and 182,000 fewer than a year ago.

The Federal Labour Agency's head, Frank-Juergen Weise, said that demand for labour is "persistently high" and "the current phase of economic weakness has barely left a trace on the labour market."

The German economy contracted by 0.2 per cent in last year's fourth quarter, but isn't believed to have shrunk further and gone into recession in the current quarter.

Germany has led the Eurozone with two years of strong economic growth, though it's expected to grow by less than one per cent this year after expanding by three per cent in 2011.

The labour market is in good shape — a contrast with countries badly hit by the Eurozone debt crisis. Unemployment rates elsewhere in the currency bloc range up to nearly 23 per cent in Spain.

In seasonally adjusted terms, German unemployment slipped to 6.7 per cent in March from 6.8 per cent the previous month, with 18,000 fewer people out of work — a bigger decline than the 10,000 economists had forecast and much better than the previous month's drop of 3,000.

"In underlying terms, labour market developments remain just as positive as has been the case since the latest economic upswing started in mid-2009… and there is no near-term end to this trend in sight," said Timo Klein, an economist with IHS Global Insight in Frankfurt.

He said the patch of economic weakness late last year may spill over into unemployment figures in the second quarter, but a subsequent rebound in leading indicators "suggests that declining joblessness will receive fresh momentum during the second half of 2012."

Business confidence in Germany has risen for five months in a row, a hopeful sign for the coming months.

Meanwhile, some 11,000 laid-off staff from a German chain of soap-and-cosmetics shops faced an uncertain future yesterday after fresh efforts by state authorities to help them broke down in disagreement.

The staff, mainly women, worked their last day Saturday at the nationwide Schlecker chain, where insolvency administrators have closed 2,200 of 5,400 branches in a bid to restore profitability.

The government of Baden-Wuerttemberg, where Schlecker's head office is located, wants to persuade the other 15 German states to fund a special employment agency for ex-Schlecker staff. But Bavaria state, thought to initially be a supporter, balked at the terms for the special job-placement scheme.

Retail experts say Schlecker had itself to blame as it failed to modernise and keep up with the other drugstore chains.

The layoffs, still not finalised in writing, have ignited a debate about the quality of Germany's help for unemployed people in low-skill, low-income jobs.