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German labor market braves winter chill

FRANKFURT: Unemployment in Germany remains close to record lows as the labor market continues to hold up comparatively well to the euro zone debt crisis, official data showed yesterday.
In seasonally-adjusted terms, the jobless rate — which measures the number of people registered as unemployed against the working population as a whole — stood at 6.9 percent in December, only fractionally higher than the post-unification low of 6.8 percent seen throughout most of last year, the Federal Labour Agency said in a statement.
In concrete terms, the jobless total rose by 3,000 to 2.94 million on a seasonally-adjusted basis, a much smaller increase than the 10,000 analysts had been expecting.
"The German economy is feeling the pull of the recession in Europe. Indicators suggest that gross domestic product shrank in real terms in the fourth quarter," said agency chief Frank-Juergen Weise.
"So far, the labor market has held up fairly robustly to the economic deterioration. But the slowdown is leaving its mark," Weise cautioned.
Taking 2012 as a whole, the annual average jobless total fell by 78,837 to 2.897 million on a raw or unadjusted basis and the annual average jobless rate fell to 6.8 percent from 7.1 percent a year earlier.
"The labor market proved again to be very robust at the end of 2012, as during the course of the whole year, despite the difficult economic conditions," said Economy Minister Philipp Roesler.
"The positive condition of the labor market will largely help stabilize the domestic economy and increase the chances that the German economy can soon overcome its current phase of weakness," Roesler said.
Economists were similarly encouraged by the better-than-expected monthly jobless data for December.
"The German labor market remains in good shape," said Barclays Research economist Thomas Harjes.
It "again appeared relatively stable in December, despite poor weather conditions, indicating that most firms do not expect the currently weak economic environment to persist for much longer."
And while the German economy, Europe's biggest, is slowing noticeably, "any further increase in unemployment figures... should be modest while reduced hours worked and short-time work schemes act as a buffer," the analyst said.
Timo Klein at IHS Global Insight said that "overall, labor market conditions continue to be healthier in Germany than in most other countries in Europe."
And while the positive trend has come to an end, "we do not expect any major deterioration with large increases in joblessness during the coming months," he said.
Berenberg Bank economist Christian Schulz said that "as economic confidence is already improving, prospects are brightening for 2013. However, since the labor market usually lags the economic cycle, unemployment might still rise slightly over the next few months before resuming its downtrend."
Natixis economist Constantin Wirschke said he expected the German job market "to remain relatively robust in 2013."
"All in all, for 2013 we do not expect the labor market to deteriorate significantly. On the other hand, we also do not expect firms to add a significant number of jobs either. Therefore, the German unemployment rate will remain at a historically low level throughout 2013," he predicted.

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