German unemployment fell unexpectedly in October, its fourth straight decline, as government measures to prevent layoffs supported the labour market in a boost for chancellor Angela Merkel's new coalition.
Data from the Federal Labour Office showed seasonally adjusted jobless falling 26,000 month-on-month. .
The figures come a day after Ms Merkel's new government of conservatives and Free Democrats (FDP) took power. They plan billions of euros in income tax relief from 2011 to shore up the economy, which is emerging from its deepest recession in the post-war era.
Joblessness has been largely kept in check in Germany by subsidies that encourage firms to shift employees to part-time work rather than fire them, but most economists expect layoffs to rise as the costs of idling production increasingly weigh on companies.
Germany pulled out of recession in the second quarter, and further growth is expected in the third quarter.
However, government stimulus has played an important hand in the tentative recovery and participants at a meeting of Ms Merkel's conservatives last week said she had told them the economy was heading for "extremely serious months" in early 2010.
The Labour Office data showed the seasonally-adjusted jobless rate declining to 8.1 per cent. The headline unadjusted total fell 118,000 to 3.229 million, its lowest level since December of last year.
A poll of the broader economy conducted by Reuters earlier this month forecast that joblessness would average 9.8 per cent in 2010, up from 8.3 per cent in 2009, weighing on private consumption which is forecast to start falling in the second quarter of next year.
Business sentiment edged up to its highest level in over a year in October but the pace of recent improvements in morale has eased.
Reuters