German jobless rate falls as economy recovers

German unemployment unexpectedly fell in February amid signs that Europe's biggest economy is returning to growth after a contraction at the end of last year.

The number of people out of work fell a seasonally adjusted 3,000 to 2.92 million, the Nuremberg-based Federal Labor Agency said today. Economists had predicted unemployment to be unchanged, the median of 33 estimates in a Bloomberg News survey showed. The adjusted jobless rate held at 6.9 percent this month after the January rate was revised up from an initially reported 6.8 percent.

"Investment, spurred by cheap money, is back helping drive the economy after being put on ice in the last quarter," said Stefan Kipar, an economist at Bayerische Landesbank in Munich. "The cumulative picture is good: Investors are looking at relatively healthy domestic demand underpinned by employment levels and are encouraged by a recovering export outlook."

The Bundesbank said last week it expects the economy to expand in the current quarter after contracting 0.6 percent in the final three months of last year. Business confidence jumped to a 10-month high and investor optimism surged to the highest in almost three years in February.

The euro was little changed against the dollar and was at $1.3140 as of 8:57 a.m. London time. Companies including BASF SE (BAS), the world's biggest chemical company, and health company Fresenius SE expect business to improve in 2013. European Aeronautic, Defence & Space Co. said it's looking to hire 5,000 people this year globally and is "redoubling" its efforts to take on engineers in Germany.

The German economy may grow 0.3 percent this quarter after shrinking in the final three months of last year, the Berlin- based DIW economic institute said yesterday, predicting growth will be led by exports and domestic demand.

German consumer confidence will rise for a second month in March as an improving economic outlook and stable labor market encourage household spending, GfK SE (GFK) said yesterday. The "turning point in economic prospects" for consumers has been reached, the market research company said.

The Ifo institute in Munich said its business climate index climbed to 107.4 from 104.3 in January. That's the biggest increase since July 2010 and the fourth straight monthly gain. Earlier, the ZEW gauge of investor sentiment rose to the highest in almost three years.

"The German labor market seems to be coping well with the weak economic development of the past months and remains robust overall," said Frank-Juergen Weise, president of the Federal Labor Agency. While Germany's unemployment rate is holding near a two- decade low, France's jobless rate stands at the highest in 13 years and youth unemployment in Germany's biggest western neighbor is almost double the national rate.