Germany's unemployment rate continues to fall

Remember Krugman's attacks on Germany over the last couple of years? Here is something from a piece that he wrote in June 2010:

And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

But despite these warnings, the deficit hawks are prevailing in most places — and nowhere more than here, where the government has pledged 80 billion euros, almost $100 billion, in tax increases and spending cuts even though the economy continues to operate far below capacity.

What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up. . . .

But German politicians seem determined to prove their strength by imposing suffering — and politicians around the world are following their lead.

How bad will it be? Will it really be 1937 all over again? I don’t know. What I do know is that economic policy around the world has taken a major wrong turn, and that the odds of a prolonged slump are rising by the day. . . .

Yet, Germany's unemployment rate keeps falling:

Spain and Italy creaked under record unemployment rates at the end of 2011, while the German jobless rate fell to historic lows — results that put the onus firmly on Germany, with Europe’s biggest economy, to take the lead in steering the euro zone back to recovery.

Joblessness in Italy rose to 8.9 percent, its highest level since current records began in 2004, the country’s statistics institute said Tuesday. Spain ended the year with unemployment at a 17-year high of 22.85 percent.

German unemployment, by contrast, fell to 6.7 percent in January, a decline of a tenth of a percentage point from December. . . .

Germany's manufacturing sector is pulling Europe's along.

Markets were buoyed by manufacturing data from Germany, the U.K. and the euro zone, released Wednesday morning. The German Purchasing Managers Index rose to 51.0 in January from 48.4 in December, slightly beating consensus expectations. The euro-zone PMI rose to 48.8 in January, which was above the earlier flash estimate of 48.7, also a little above consensus. In the U.K., PMI rose to an eight-month high of 52.1 in January, up from a revised reading of 49.7 in December. . . .

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