Page last updated at 15:37 GMT, Thursday, 29 May 2008 16:37 UK

German jobless rate goes below 8%

BMW worker in east Germany
Germany's economy is driven by its exports

Germany's unemployment rate has fallen below 8% for the first time in more than 16 years, government figures show.

The number of people out of work in May was 131,000 lower than in the previous month to 3.283 million. The jobless rate was 7.8% - from 8.1% in April.

Unemployment was last below 8% in 1992, during a building boom following the reunification of East and West Germany.

Some analysts said they expected demand for labour to continue to grow in the country's export-driven economy.

'Decreasing momentum'

"Underlying labour market conditions are continuing to improve, thus supporting consumer demand," said Timo Klein, an economist at Global Insight in Frankfurt.

"This has remained subdued so far due to inflation fears, but should strengthen once these recede."

However, there have been warnings that the pace of job creation would slow this year.

"The German job market still looks robust, but the first signs of decreasing momentum have seen the light of day," said Peter Leonhardt of DekaBank in Frankfurt.

"Declining orders from Germany and abroad, insecurity about the US economy, the rising price of raw materials and non-wage labour costs which have started climbing again make for a poisonous cocktail for the job market."

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