As German companies added 66,000 new jobs to their payrolls in March, the country's unemployment figure dropped to 2.845 million, according to data released by the German Labor Agency (BA) on Thursday.

Compared with the same month a year ago, about 87,000 fewer Germans were officially registered as unemployed, slightly driving down the overall jobless rate by 0.1 percent to 6.5 percent.

Labor Agency chief Frank-Jürgen Weise said in a statement that the German jobs market "continues to develop positively" even though figures adjusted for seasonal and calendar variations didn't change. The adjusted unemployment rate remained at the February level of 6.2 percent, he added.

Mounting challenges

Even though BA described labor market developments as "a good start into the year" in which growth was likely to "exceed 0.3 percent" in the first quarter due to a mild winter, the agency expected job creation to "flatten out" in the course of the year.

"Economic expectations, after declining sharply recently, have stabilized, but don't point to any strong momentum," the agency said.

BA's view has recently been born out by a number of economic think tanks and the German central bank, the Bundesbank, who have all slashed previous full-year growth forecasts for Germany significantly.

Nuremberg-based think tank IAB, for example, sees major risks for German jobs and growth looming on the horizon. In its spring report the institute points to the ongoing threats of an end to the Schengen zone borderless travel in Europe and a likely exit of Britain from the EU. Moreover, the current upswing in Europe's major export market, the United States, was "faltering" it said. "In addition, emerging economies such as China, Brazil and Russia are facing severe economic difficulties," IAB wrote.

As a result, the think tank expects job creation to remain flat, with joblessness to stabilize at around 2.77 million on average for the whole of 2016.

uhe/hg (dpa, Reuters, AFP)