German Unemployment Unexpectedly Declines to 8.1%

The German unemployment rate declined to an annual rate of 8.1% in October from 8.2% in previous month, surging ahead of expectations for a second consecutive month as economists forecasted an advancement of 8.3%. At the same time, the breakdown of the report showed number of people out of work tumbled 26,000 to 3.43 million, with vacancies sliding to 479,100 from 485,600 in the prior month, and the data reinforces an encouraging outlook for the economic recovery as that Chancellor Angela Merkel’ stimulus package provides companies with an incentive to maintain their employees. However, the Bundesbank may continue to support the economy throughout the second-half of the year to promote household spending as policy makers anticipate growth to remain subdued throughout the first-half of 2010 and see a risk for a protracted recovery. At the same time, European Central Bank council member Axel Weber signaled they may start to withdraw emergency stimulus measures, but went onto say “some of the new instruments will be needed longer than others” as the recovery remains fragile.