Source AP ©

German unemployment falls to 9.5 percent

For the first time since October 2002, when fewer that 4 million people could not find job, unemployment in Germany decreased to 9.5 percent.

The drop comes as more and more German companies seek to fill vacancies amid burgeoning demand in Europe's biggest economy.

"The economic upswing continues to pump energy into the job market," said Frank-Juergen Weise, head of Germany's Labor Office.

At the same time, the nation's powerful IG Metall industrial union is pressing for higher wages ahead of a key round of talks. The union said tens of thousands of workers staged brief warning strikes across the country on Thursday to keep up the pressure.

Those included 3,000 workers walking off their jobs at the Regensburg BMW AG factory and another 12,000 at DaimlerChrysler AG's Mercedes' plant in Sindelfingen.

The country's Federal Labor Office said Wednesday that that 3.967 million people were without work in April, 1.1 million less than two years ago, and less than the month before when 4.1 million were without a job.

German Chancellor Angela Merkel welcomed the development in the job market as "very positive," her spokesman Ulrich Wilhelm said, adding the government would stick to its course of reform, "so that even more people will have the chance to find a job."

Adjusted for seasonal factors, the number of unemployed people fell by 9,000 in April, compared to a revised drop of 52,000 a month earlier, bringing the seasonally adjusted unemployment rate to 9.2 percent, unchanged from a month earlier and less than the 11 percent a year earlier.

Analysts said the smaller decrease was not a worrying factor.

"Mild winter weather and a new incentive to keep construction workers and roofers off the dole during the cold season had led to less seasonal layoffs in the winter months than before," said Holger Schmieding, Bank of America's chief economist for Europe. "Therefore, fewer construction workers than usual need to be rehired this spring. Due to the seasonal adjustment, this shows up as a subdued labor market performance in April."

Germany's unemployment rate has been steadily improving as the country maintains its economic upswing, including stronger consumer demand and investment within the country by German and foreign companies.

"Given these impressive figures, one does not have to be an expert to derive a simple message: The German labor market has a good, not to say, an excellent run," said Andreas Rees, an economist with UniCredit in Munich.

"There is little doubt that the German success story will continue this year," Rees said, adding that the ranks of the unemployed should remain at or around 3.8 million on average. "It may sound strange, but despite still elevated levels in unemployment, the labor market is already getting tight."

One area of concern, though, is the wage talks with some of the nation's biggest unions. The ongoing walkouts showed IG Metall was keeping up the pressure ahead of key talks Thursday.

The union has been pushing for a 6.5 percent increase for its roughly 3.4 million workers nationwide. It rejected an offer employers made last month of a 3 percent increase - made up of a formal salary rise of 2.5 percent and a half-percent "economy bonus."