German unemployment drops more than expected in April

German unemployment dropped more than expected in April, according to figures released by Destatis on Tuesday.

Unemployment fell by 72,200, taking the total number of unemployed down to 2.23 million, which is the lowest April reading since reunification. In seasonally-adjusted terms, unemployment fell by 12,000 following a 7,000 drop the month before, which was better than market expectations for a 5,000 decline.

This meant that the unemployment came in 4.9% in April, unchanged from March and in line with consensus expectations.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said this is another solid set of headlines in the German labour market, but the details were less upbeat.

"Vacancies fell, by 4K, adding to recent evidence that growth in new job openings has stalled. This is fully consistent with a lagged impact from the sharp slowdown in GDP growth that began in the middle of last year, and we think the claims data will start to show signs of weakness soon too.

"Employment, released with a lag of one month, rose 1.1% year-over-year in March, the same pace as in February, but also here we expect a slowdown in coming months.

"Overall, investors should now consider two contradictory stories in the German labour market. Headline unemployment remains at record low, and employment is at a record high, indicating that wage pressures should continue to rise, but the rate of improvement in the headline labour market data is set to decline sharply this year. This is partly because the economy is close to full employment but, more recently, also because GDP growth has effectively halved since last year."