German jobs market strong, but retail sales weaken

German unemployment unexpectedly fell in January in seasonally adjusted terms, ending a long run of increases.

That was welcome news for Chancellor Angela Merkel, who faces an election in September that could be influenced by the state of the economy.

The unadjusted jobless total, which is the headline figure used in Germany, rose above three million for the first time since March of last year, but the Labour Office said seasonal factors were behind that increase.

Labour Minister Ursula Van der Leyen was cautiously upbeat. She told reporters: “The German job market is fluctuating, but within an expected range, and it is still very stable. Of course we’re seeing the effects of the difficult economic situation in many European countries, as well as the drop in GDP in the fourth quarter of 2012.”

The head of the Federal Employment Agency said he was not particularly alarmed by the rise in the unadjusted total and economists at Germany’s central bank recently said the economy appears to be recovering from a slump in the fourth-quarter.

However the strong labour market is not translating into a significant increase in private consumption.

Retail sales – which are notoriously volatile in Germany – tumbled in December by 4.7 percent compared to a year earlier.

But some economists warned against reading too much into that, saying there was anecdotal evidence from retailers of solid sales in the holiday period.

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