German unemployment continues to decline, shrugs off Brexit risk

Unemployment in Germany continued to decline in June, indicating a robust economic growth of the nation, just before Britons surprisingly voted to leave membership of the European Union.

The number of people out of work fell by a seasonally adjusted 6,000 to 2.69 million, data from the Federal Labor Agency in Nuremberg showed on Thursday. The median estimate in a Bloomberg survey was for a drop of 5,000. The jobless rate remained unchanged at a record low of 6.1 percent.

German private sector deliberately shrugged off the risk of Britain leaving the EU, with the business confidence index reaching a near seven-month high and private-sector growth accelerating to the fastest pace this year. While the economy shrank significantly during the second quarter of this year, owing to slow and construction and manufacturing, Bundesbank had predicted a pickup in growth through the rest of the year.

Further, unemployment dropped by 2,000 in western Germany and declined by 4,000 in the eastern part of the country, the report showed. According to a survey by the Ifo, almost 60 percent of German companies believed that a possible Brexit is less likely to have any significant impact on their businesses, despite the UK being Germany’s third-largest export destination.

Moreover, Germany, along with France and Italy, are among the countries likely to be less affected than the EU average by Britain’s decision to leave, according to the International Monetary Fund. Following the vote, German Chancellor Angela Merkel said the EU remains one of the biggest economic global powers and is "strong enough" to withstand the shock, Bloomberg reported.

Meanwhile, European Central Bank President Mario Draghi said that the German economy is likely to grow as much as 0.5 percentage point weaker than previously estimated over the course of the next three years.