German unemployment fell to 7% of the workforce in May, official data showed Tuesday though a slower rate of decline and muted retail sales took some of the shine off the results.
The Federal Labour Agency said the unadjusted number of unemployed had dropped below three million in Europe's biggest economy, with a fall of 118,000 bringing the politically symbolic figure to 2,960,000.
When adjusted for seasonal and calendar effects, it came to 2.974 million, "well below the mark of 3.190 million seen at the end of the previous economic boom in October 2008," IHS Global Insight economist Timo Klein noted.
The unemployment rate of 7% is the lowest level for Germany since records were compiled following its reunification in late 1990.
When adjusted for seasonal and calendar effects the decline was a much more modest 8,000 however, way below an average analyst forecast fall of 30,000 compiled by Dow Jones Newswires.
That compared with an average drop of around 38,000 per month in the period from January through April moreover, indicating that unemployment fell at a much slower pace, perhaps because better weather early this year moved declines up a few months.
Across the 17-nation euro-zone, unemployment was unchanged in April at 9.9% for the third month running, official European Union figures showed.
But the steady decline has yet to produce an equivalent rise in consumer spending.
Earlier on Tuesday, the national statistics office said retail sales gained 0.6% in April, following a revised slump of 2.7% in March.
German manufacturers have well-stocked order books and are investing more, and the demand for labour should remain strong, analysts say, with some warning of shortages.
The Ifo economic research institute said Tuesday that its latest survey of German credit conditions showed "the economic upswing in Germany is being fuelled by unusually strong domestic investment activity that is supported, if not triggered, by the favourable lending conditions of the banks."
Many economists have revised their 2011 German growth estimates higher to 3% or more, compared with the official forecast of 2.6%.
