German unemployment fell in August to its lowest since November 2008, laying the ground for further growth in consumer spending that the economy needs for a more balanced rebound.
The Federal Labour Office said on Tuesday unemployment fell by a seasonally adjusted 17,000 to 3.193 million. The decline was slightly less than the median 20,000 forecast by economists in a Reuters poll.
The adjusted unemployment rate remained steady at 7.6 percent, in line with the Reuters poll.
Germany -- Europe's largest economy -- grew at its fastest rate since reunification in the second quarter, boosting confidence the economy will keep speeding ahead even if peers face the risk of a double-dip.
Business morale rose to its highest in more than three years in August and consumer morale, long seen as Germany's weak point, is also increasingly upbeat.
The jobless data demonstrate how Germany is outstripping its peers. The euro zone jobless rate for July stood at a much higher 10 percent.
Germany has faced criticism from other countries -- including France -- for not doing enough to stimulate domestic demand, from which its peers' exports would benefit.
The impressive performance of the labour market can only become a real success story if it eventually leads to a pick-up in private consumption. All ingredients are in place for this to happen now, said Carsten Brzeski of ING Financial Markets.
It is not only the drop in unemployment which bodes well for private consumption but also job creation. Since the beginning of the year, employment growth has been on a positive trend, he said.
Growth in exports is expected to fade in the second half of the year as the outlook for some of Germany's trading partners is less rosy, putting the focus on consumer demand.
The German government is also pressing ahead with 80 billion euros of budget cuts over the next four years.
The American economy is going quite badly right now, Heinrich Alt of the Labour Office told a news conference.
There are a bunch of risks. The development so far is stable but we cannot ignore that the situation is more fragile than at other times of the upswing.
Economists said that may not dampen the job market significantly.
The economy will not be able to sustain these high growth rates. The tempo will slow in the autumn and next year. But the slowdown won't be dramatic enough to have a major impact on the labour market, said Eckart Tuchtfeld of Commerzbank.
The headline unadjusted unemployment total fell by 4,000 on the month to 3.188 million, the Office said.
Earlier on Tuesday, Federal Statistics Office figures showed the number of people in work in Germany rose to 40.305 million in July from 40.296 million in June.
(Reporting by Christian Kraemer, writing by Annika Breidthardt, editing by Mike Peacock)