The number of unemployed in Germany fell by more than expected in January, official figures showed today in a sign the economy made a solid start to 2007 despite the impact of a sales tax hike.
The unemployment total fell by 106,000 on the month in seasonally adjusted terms to 3.976 million, Federal Labour Office figures showed.
The unemployment rate, in adjusted terms, fell to 9.5 per cent from 9.8 per cent in December.
The headline unadjusted total rose to 4.247 million from 4.008 million, for a rate of 10.2 per cent, up from 9.6 per cent in December.
The upbeat tone to the jobless figures chimed with a report showing German retail sales rose almost twice as much as expected in December, jumping 2.4 per cent on the month in real and seasonally adjusted terms ahead of January1st's sales tax hike.
A wider measure published by the Bundesbank that includes sales of vehicles and turnover at petrol stations showed a monthly gain of 4.4 per cent.
Germany's ruling coalition raised value-added tax (VAT) by three percentage points to 19 percent at the start of the year in a move analysts predicted would boost sales at the end of 2006 but crimp spending in the first quarter of 2007.
The Finance Ministry said in its monthly report on Wednesday that Germany's economic upswing is set to gain momentum as the year progresses, supported by solid demand from abroad, but the risk to exports from a stronger euro remains. "The economy is looking good," said BHF-Bank economist Peter Meister.