German unemployment up on seasonal factors

[February 01, 2011]  BERLIN (AP) -- Germany's unemployment rate jumped in January to nearly 8 percent, the government reported Tuesday, but economists said that when adjusted for the harsh winter's effects on seasonal jobs the labor market in Europe's largest economy is showing continued signs of strength.

The number of unemployed in January spiked up 331,000 over the previous month to some 3.4 million, the Federal Labor Office in Nuremberg reported. That sent the unemployment rate up 0.7 percentage points to 7.9 percent.

But when adjusted for seasonal variations, the unemployment rate fell to 7.4 percent from 7.5 percent the month before -- a new post-reunification low.

"Unemployment during the winter break increased, but showed a clear drop when adjusted for seasonal factors," said Labor Office head Frank Weise. "The number of people paying into social insurance and employed people are clearly going up, and the demand for labor continues to rise."

The German economy rebounded strongly in 2010, growing by 3.6 percent as a recovering global economy fueled a surge in exports -- a traditional German strength -- and domestic demand showed signs of improvement.

The government in January raised its growth forecast for this year to 2.3 percent from 1.8 percent.

The overall number of unemployed for January 2011 was 270,000 lower than in January 2010 when Germany was just beginning to emerge from the financial crisis.

"Excluding the weather disruptions, the outlook for the labor market remains unchanged: favorable," said UniCredit economist Alexander Koch. "The economic climate is rock-solid and corporate employment plans in most sectors are clearly expansionary."

IHS Global Insight economist Timo Klein said he expects seasonally adjusted unemployment to continue to decline during 2011.

"Overall, labor market conditions will continue to improve in the months ahead," he said. "Recent output and leading indicator data have shown that domestic demand in particular is demonstrating newfound strength."

[Associated Press; By DAVID RISING]

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