2010.08.3107:34:00UTC+00German Unemployment Rate Remains At 7.6%

Germany's unemployment rate was stable in August, while the number of unemployed continued to fall, official figures showed on Tuesday. The data continues the recent string of impressive economic numbers from Germany as it charts its exit from its worst post war recession.

The Federal Labor Agency said the unemployment rate was unchanged at 7.6%, but the number of unemployed persons fell by 17,000, slightly less than expectations for a 20,000 decrease. This was the 14th straight month of decline in unemployment levels. Unemployment had dropped by 21,000 in July.

"While unemployment is still rising elsewhere in the eurozone, the German labor market has been particularly resilient, thanks initially to the government's 'Kurzarbeit' subsidy scheme, but perhaps now reflecting the underlying economy," said Jennifer McKeown, an economist at Capital Economics.

The German government introduced a part-time work subsidy to help companies maintain the size of the workforce and reduce jobless woes through the global downturn. The scheme is now being gradually withdrawn, as companies start putting their workforce through full time work.

According to the statistical office Destatis, the number of unemployed totaled 3 million in July. The European Union harmonized unemployment rate was 6.9%.

The number of employed people in Germany totaled 40.2 million in July, an increase of 141,000 or 0.4% from the same month a year ago. Compared with June, the number of employed persons fell by 65,000 or 0.2%.

"The recent performance is remarkable as it coincides with a gradual decline in short-term work schemes, underlining the strength of the labor market," said Carsten Brzeski at ING. "Looking ahead, the impressive performance of the labor market can only become a real success story if it eventually leads to a pick-up in private consumption," he said, adding, "all ingredients are in place for this to happen."

The German economy expanded a record 2.2% between April and June, boosted by strong exports and investment. This was more than four times faster than the 0.5% rise in the first quarter.

The economy's strong showing in the second quarter spurred the country's central bank to raise its 2010 growth forecast. The Bundesbank now predicts Europe's largest economy to expand by 3%, up from its previous growth estimate of 1.9%.

Meanwhile, the euro area's unemployment rate remained unchanged at 10% in July, in line with expectations. Eurostat said the unemployment rate of the entire European Union was also flat at 9.6%.

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