German Unemployment Rate Hits Lowest Level in Two Decades

German unemployment rate fell to a record low in March, in contrast to many other nations in the eurozone which suffer from rising unemployment levels, while also showing evidence that growth in the Europe’s largest economy is picking up.

The jobless rate in Germany fell to 6.7 percent in March from 6.8 in the previous month, to record the lowest level in two decades, Federal Labor Agency said on Thursday.

“The German labour market is incredibly strong. It is comforting at a time of such stress to see such an impressive performance, holding out real hope of a rebalancing of German growth towards domestic demand,” said a note from Societe Generale Cross Asset Research.

The export-driven economy contracted by 0.2 percent the last quarter of 2011, as the eurozone debt crisis and global slowdown had hit its exports and private consumption. However, recent surveys showed improvement in the economic activity of the country, with domestic demand witnessing a strong increase.

“In contrast to previous cycles, the recovery is likely to be driven by solid domestic demand. Even with companies’ employment intentions falling back slightly, the labour market should remain in good shape, given almost record-high vacancies,” said a note from HSBC Global Research.

“Due to the relative attractiveness of its labour market, Germany had strong net immigration in 2011 (+240,000), which led to the first rise in population since 2002. Both factors create a solid foundation for a robust private consumption increase in 2012 of 0.9%, after a very strong (by German standards) 2011 (+1.4 %),” said HSBC.