Germany’s unemployment rate unexpectedly fell to a record low in January, in a sign that economic sentiment in Europe’s largest economy is withstanding the tumult in global markets.

The jobless rate fell to 6.2 per cent, the lowest level since German reunification, from 6.3 per cent, data from the Federal Labor Agency in Nuremberg showed on Tuesday. The number of people out of work declined by a seasonally adjusted 20,000 to 2.73 million. Economists in a Bloomberg survey predicted a drop of 8,000.

The strength of Germany's labor market augurs resilient domestic demand that should keep underpinning what Economy Minister Sigmar Gabriel said last week was a "good, stable situation" for the country. The economy may be shortly in for another boost as the European Central Bank considers adding to stimulus for the euro area as a whole. "The good development of the job market has continued at the beginning of the year," Frank-Juergen Weise, president of the labor agency, said in a statement.

While companies still face downside risks, most notably a slowing Chinese economy that is jolting global financial markets and weighing on global trade, high employment and weak oil prices have boosted consumer spending.

In Italy, the jobless rate was unexpectedly unchanged in December, signaling the risk that the effect of new labor legislation on hiring might cease without an acceleration of economic growth. The rate remained at 11.4 per cent, a three-year low, national statistics agency Istat said Tuesday in Rome.

Jobless claims in Spain rose less than anticipated in January, in what is typically a challenging month for employment as temporary and seasonal staff are laid off. New data on Tuesday showed the number of people registered as unemployed rose by 57,247 from December, ending a two-month falling streak.

Bloomberg