Germany’s robust labour market brushes off Brexit fears

BERLIN: German jobless numbers fell more than expected in August, posting their 12th consecutive monthly fall and reaffirming the strength of a labour market that has fuelled private consumption and turned it into a main pillar of growth.

The drop allays fears that June's Brexit vote and global uncertainty could impact Europe's largest economy, which grew in the first two quarters by 0.7 and 0.4 percent respectively, cementing its role as the growth engine of the euro zone.

German retail sales data meanwhile showed the sector grew by 1.7 percent in real terms from January to July compared with the same period last year, supporting expectations that private consumption will cushion external shocks.

These include Britain´s June 23 vote to leave the European Union.

"The Brexit vote has had no damaging effect on the resilient German labour market," said KfW Bank economist Joerg Zeuner.

But some economists still expect the shock referendum result to have an impact on the German economy in the coming months.

The DIW economic institute said growth would slow to 0.3 percent in the third quarter, partly because of Brexit.

"Growth will continue to be driven by private consumption, but this is expected to lose momentum," said DIW economist Simon Junker.

The seasonally adjusted jobless total fell by 7,000 to 2.675 million, the Labour Office said.

That compared with a consensus forecast in a Reuters poll for unemployment to fall by 5,000.

The adjusted unemployment rate remained at 6.1 percent, the lowest level since German reunification in 1990.That compares with jobless rates of 10.1 percent in the euro zone and 11.4 percent in Italy, whose economy stagnated in the second quarter according to preliminary figures.

Economic growth in the euro zone slowed to 0.3 percent in the second quarter.

Spurring growth and inflation have been daunting challenges for the European Central Bank, which is facing calls to further expand its extraordinary stimulus.