NUREMBERG, Germany German unemployment fell for the ninth month in a row in December to its lowest in five years, in the latest sign that strong economic growth is being maintained in Europe's leading economy.

Seasonally adjusted data released by the federal labor office on Tuesday showed unemployment fell in December by 28,000 from the previous month to 3.767 million, the lowest since November 1995.

The drop -- slightly bigger than analysts had expected -- brought the adjusted jobless rate down to 9.2 percent from 9.3 percent, the Bundesbank said.

Unemployment in 2000 as a whole fell by 211,000 to 3.89 million, a drop hailed by Labor Minister Walter Riester as the biggest since German unification a decade ago.

"With this positive result we have laid the foundations for a successful 2001, when we expect both a significant fall in unemployment and strong growth in numbers in work," Riester said in a statement.

The figures marked a key step toward realizing Chancellor Gerhard Schroeder's goal of cutting unemployment below 3.5 million before Germany's next general election, due in autumn 2002.

But employers and union leaders nevertheless found themselves in rare agreement that not enough had been done to tackle Germany's still-high unemployment.

"At the start of the New Year we still have 3.8 million people out of work. That is anything but satisfactory," said Klaus Zwickel, leader of the IG Metall Industrial Workers Union, calling for a training and hiring offensive.

Germany Lagging Behind

Martin Kannegiesser, managing director of the BDA employers group, said the unemployment fall was too slow against a backdrop of strong economic growth of three percent in 2000.

"Germany is lagging behind other more successful countries in the speed at which it is reducing unemployment," Kannegiesser said in a statement, calling for steps to liberalize Germany's labor market.

The headline unemployment rate, based on unadjusted data, rose to 9.3 percent compared with 8.9 percent in November as the unadjusted number out of work rose to 3.809 million from 3.645 million due to typical seasonal factors.

That was nevertheless the lowest total for the month since December 1995 and marked an encouraging fall of nearly a quarter of a million from the same month a year earlier.

Economists said mild early winter weather, which delayed the onset of seasonal lay-offs in the construction sector, probably favored a sharper than expected drop in the adjusted number.

They expected the decline in joblessness to continue, though not spectacularly, as economic growth seems set to slow slightly moving into 2001.

"The momentum of the decline will not be particularly great. economic growth won't be strong enough for a bigger fall," said Lothar Hessler of HSBC Trinkhaus, who forecast another decline in unemployment this year of a quarter of a million.

Federal labor office President Bernhard Jagoda forecast that unemployment would average 3.6 million in 2001 and predicted that headline, unadjusted unemployment would probably rise in January by between 200,000 and 250,000.

Job Creation

Separate employment figures for October showed that the German economy was continuing to generate new jobs at a faster pace than the rate of the decline in unemployment.

Seasonally adjusted, the number of people in work rose by 36,000 in October to 38.7 million. Year-on-year, employment rose by 574,000 jobs to 39.1 million, unadjusted.

Analysts say that employment gains are in part due to people who had been working in the black economy taking advantage of changes in rules which lets them take part-time jobs, officially registered, which are free of income tax.

Jagoda said a mix of factors, including strong export demand, the weak Euro, moderate wage increases and the anticipation of big tax cuts which took effect at the start of this year had all played a positive role in December.

But he said job creation was still concentrated in the richer west of the country, where four Germans in five live, and that the formerly communist East continued to struggle.

Unemployment in the East stood at 17.2 percent in December, unadjusted, compared with 16.3 percent in November and with 7.4 percent in the West. The adjusted number of jobless in the East fell 8,000 in December compared with 20,000 in the West.

(Reuter)