Germany provided a rare ray of light in the euro zone gloom today, with record low unemployment and surprisingly good retail data showing Europe's top economy is holding up well in the crisis.
Germany's unemployment rate fell to 6.4% in November, its lowest level since reunification more than two decades ago, with the number of people out of work declining much faster than economists had expected.
"The German labour market is benefiting from the good economic trend until now. In November, there was no clouding over," said Heinrich Alt from the federal labour agency. "Unemployment is going down, employment is still rising and the demand for labour has also increased," he added.
Last week, a disappointing bond auction in Germany fuelled fears that the euro zone debt crisis was seeping from the edges of the bloc to the core. Markets were concerned that if European powerhouse Germany was having difficulty selling its bonds, then there was little hope for the likes of Italy and Spain.
However, despite a flood of doom-and-gloom headlines from around Europe, Germany continues to show resilience. The optimistic labour minister said there were "no signs" of a downturn in Europe's powerhouse economy.
"Quite the opposite: firms' order books are full. There is demand around the world for German goods despite the euro crisis and a poor outlook. Businesses and consumers are expecting a good Christmas," said Ursula von der Leyen.
Analysts also cheered the news but warned that unemployment was a lagging indicator and jobless lines were likely to grow once the effects of the crisis have had more time to feed through into the real economy.
German retail sales edged up by 0.7% in October compared to the previous month, while analysts had expected no change. "It looks as if German consumers have found their own therapy to cope with the debt crisis trauma: comfort shopping under the Christmas tree," commented an economist at ING bank.
On the German domestic front, both the closely watched Ifo index of business confidence and the GFK survey of consumer confidence rose this month.
Foreign demand for goods "made in Germany" is expected to hold up even during the crisis, the German Exporters Association (BGA) said yesterday, seeing 6% growth in 2012 after a stellar 12% this year.
