German unemployment slipped in Jan., adding to signs Europes biggest economy will gather momentum in the first quarter, as confidence is returning gradually to the euro area after the recent measures adopted by European officials last year.
Joblessness data showed 16,000 drop this month 2.92 million, compared with forecasts of 8,000 rise while the prior reading of 3,000 was revised to 2,000 fall to give an indication the labor market is in a good health, where unemppo0oyment rate fell to 6.8%, the lowest in two decades, in Jan. from 6.9%.
The improvement in the labor market is a byproduct of the return in confidence to European markets as European officials stepped up their efforts to resolve debt crisis.
Data released last week showed that German business confidence resumed its rise for a third month in Jan. to 104.2 this month from 102.4 last month, while investor confidence leaped to 2 ½ year high to 31.5 this month from a prior of 6.9.
European finance ministers last year as reached an agreement with the IMF to unlock Greeces next aid tranche on four installments starting December and ending in March 2013, where they gave the green light to a disbursement of 9.2 billion euros during their meeting last week.
Another critical outcome of the EU finance ministers gathering at the end of last year was making the ECB as chief supervisor of euro zone banks which is deemed a step of a paramount importance as it paves the way for a strong European banking union.
Regarding fundamentals, German PMI manufacturing for Jan. eased contraction to 48.8 from 46.0, whereas services recorded a widening expansion to 55.3 from the prior of 52.0.
ECB President Mario Draghi said the worst of the debt crisis may be over, stating the “darkest clouds” have lifted.
The German economy is probably gathering momentum in the first quarter after the most recent growth data showed that the economy grew 0.7% in 2012, much below 2011 levels of 3%, suggesting a contraction of 0.5% in the last three months of 2012.
The IMF predicted slower growth for Germany to reach 0.6% in 2013, yet it expects 2013 to be better than 2012 for the global economy.