German unemployment dropped sharply this month as spring brought another sign of recovery in Europe's top economy, but undoing a short-work scheme might limit the need for many more new workers.
Unemployment dropped to 8.1% of the workforce from 8.5% in March, according to unadjusted figures released today by the Federal Labour Agency that serve as a basis for public debate.
'There was an unexpectedly strong springtime upturn on the labour market in April. The current trend is encouraging,' the agency's chief Frank-Juergen Weise said.
Improvements were seen in the tourism and construction sectors, which were hit by particularly cold and snowy winter weather during March, while an earlier end to the Easter holiday also probably contributed to the result.
The seasonally-adjusted rate favoured by analysts fell for the fifth month in a row and posted its sharpest drop since early 2008 to 7.8%, the lowest level since December 2008. Analysts had forecast an adjusted rate of 8%.
They said the drop 'highlights the current contrast between the German economic climate and the periphery's troubles,' as they referred to troubled euro zone countries like Greece, Portugal and Spain.
They put the improvement down to active labour market policies, including a government-subsidised short-work programme that lets companies cut workers' hours, a scheme to be extended to March 2012.
But trouble spots remain in formerly communist areas of eastern Germany, and the highest unemployment, at 14.2%, was recorded in Berlin.
Around 3.4 million people were looking for work in all, or 162,000 fewer than in the previous month, the labour agency said. he figures came two days after the GfK research group said that German consumer confidence had risen more than expected.
But while greater labour market flexibility has helped keep unemployment from soaring, it has also caused disposable incomes to decline, which has kept private consumption subdued.
