Berlin - German unemployment fell unexpectedly in January pushing the jobless rate down to near a two-decade low as hiring in Europe's biggest economy picked up, data released Thursday showed.

The labour office said the seasonally-adjusted number of people out of work had dropped by 16,000 month on month, resulting in job queues declining to 2.916 million.

“The unfavourable economic environment have left only a few traces on the labor market only a few tracks,” said labour office chief Frank-Juergen Weise.

At 6.8 per cent, the jobless rate now stands close to its lowest level in two decades. The jobless rate came in at 6.9 per cent in December.

The January fall brought to an end nine consecutively monthly gains in the numbers out of work. Analysts had forecast an increase of 8,000 this month.

The latest labour market data adds to signs that the German economy rebounded as it entered the new year after a slowdown in 2011.

Highlighting the economic uncertainty that hit the nation last year, the statistics office said monthly retail sales fell by a more-than-forecast 1.7 per cent in December. Analysts had forecast a more modest decline of 0.1 per cent.

In seasonally unadjusted terms, the numbers out of work rose by 298,000 to 3.138 million in January.

The unadjusted unemployment rate rose 0.7 per cent to 7.4 per cent, the labour office said. A year ago, the unemployment rate stood at 7.3 per cent.

But Weise said the increase in the unadjusted numbers reflected seasonal factors, adding that the January rise was a little weaker than in previous years. - Sapa-dpa