German joblessness hits record low as firms push capacity limits

Frankfurt - German unemployment extended its decline in March as companies in Europe’s largest economy boosted their labour force to keep up with bulging order books.

The jobless rate dropped to a record low of 5.3% in March, the Federal Labour Agency in Nuremberg said on Thursday. The number of people out of work plunged a seasonally adjusted 19 000 to 2.373 million. Economists surveyed by Bloomberg forecast a drop of 15 000.

Germany has been a key beneficiary of buoyant global trade and domestic spending, and the Bundesbank says the economy’s strong upturn probably continued in the first quarter of this year.

While sentiment indicators have recently taken a hit amid mounting fears over US protectionism, the high volume of orders accumulated in the second half of last year is likely to support manufacturing activity for now, according to the central bank.

One risk facing some sectors is that the country’s increasingly tight labour market will limit companies’ ability to hire staff to sustain growth. Construction is seeing “considerable capacity bottlenecks,” according to the Bundesbank, and one in four businesses cite labour shortages as a reason for holding back production, EU data show.

Joblessness fell by about 17 000 in west Germany and by 2 000 in the eastern part of the country. Data on eurozone unemployment will be published next week and are forecast to show a drop to 8.5%, the lowest in more than nine years.

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