German unemployment drops

Berlin - Germany's tally of unemployed fell by 22 000 in October, according to seasonally adjusted data released by the Labour Office on Thursday, showing that fears of recession in the eurozone have not translated into a fall-off in hiring yet.

The slight change in numbers left the month-on-month seasonally adjusted unemployment rate unchanged at 6.7%.

The fall surprised analysts. Those surveyed earlier by the AFX news agency had forecast a rise by 4 000. It was "significantly better than expected," said Thomas Harjes of Barclays.

"With a pickup in the autumn, there's been a significant drop in the number of unemployed people for October," said Frank-Juergen Weise, head of the Labour Office. "The current business uncertainties we're seeing now are not being reflected in the labour market."

Business confidence in Germany took a dive this month, with the respected Ifo index falling Monday to 103.2, down more than a point from last month's 104.7, as storm clouds gathered over the eurozone.

Mario Gruppe, an analyst at German ban NordLB, said he still saw reason for concern about jobs, given the wider economic uncertainty.

"Even if there is no sign of a worsening on the labour market right now, a jab on the brakes is bound to show up later," he said.

The Labour Office's Weise said economic growth and unemployment rates do not "always directly correlate." For example, the numbers of low-paid service jobs can increase without much effect on growth.

"In any case, we do have growth when it's at 1.2%," he said, referring to the German government's forecast for the full year.