German unemployment fell much further than expected in September, showing companies were still hiring despite fears of a coming economic slowdown that could be worsened by Europe's debt problems. The upbeat data from Europe's largest economy argues against an interest rate cut next month by the European Central Bank, which has returned to crisis mode as the debt crisis threatened to suck in banks and potentially Italy or Spain. Seasonally adjusted figures from the labor office showed the number of unemployed fell by 26,000, far more than the 8,000-drop expected by economists, putting the jobless rate at its lowest level since reunification two decades ago. “German companies continue to hire despite signs of a slowdown,” said Christian Schulz from Berenberg Bank. “The high degree of competitiveness ... will pay off throughout the business cycle.” Germany's economy — Europe's largest — has stood out as a star performer in the industrial world since the end of the 2008 financial crisis, although economists now expect growth to ease in the wake of a global slowdown. The jobs figures, which put unemployment at 6.9 percent, highlighted how past demand is delaying effects on the labour market from any slowdown for now. “The positive trend in the labour market is continuing,” said Peter Meister from BHF-Bank. “We had heard similar things from the companies — firms' high order levels are still helping them.” Falling employment also leaves German consumers more likely to spend — a sign of robustness that runs countercurrent to ECB concerns for the broader euro zone. Speculation the bank may trim borrowing costs to boost growth has gained ground this month — money markets price in a significant chance of a move in October — but most economists still believe the bank will hold off until early next year. “There is less reason to make a swift rate cut,” said Ulrich Kater from DekaBank. “The economy is clearly not about to stall — there is some weakness but nothing that would trigger panic mode at the ECB.” “More important for them is making liquidity available for the banking sector,” he added. Germany's swift recovery has helped stimulate growth in Europe, despite growing concerns over how the euro zone is handling the debt crisis in its weaker periphery states. The success has been apparent on the jobs front, where unemployment has been on a steady downward path since August 2009, and the most recent forward-looking surveys suggest it is set to continue.
