Berlin - German unemployment fell to 16-year low in October, defying the economic gloom facing the nation, data released Thursday showed.

Seasonally unadjusted German unemployment fell to below 3 million for the time in 16 years, the Nuremberg-based Federal Labour Agency said with the numbers dropping by 84,000 in October to 2.997 million. This was 437,000 less than in the same month last year.

After dropping by a revised 28,000 in September, seasonally adjusted unemployment, which analysts see as pointing to long-term market trends, fell by another 26,000 to 
3.151 million in October.

This resulted in the seasonally adjusted unemployment rate edging down from 7.6 per cent in September to 7.5 per cent in October.

Analysts had expected the numbers out of work in Europe's biggest economy would drop by 10,000 in October amid signs Germany's labour market has so far managed to escape the fallout from the financial crisis triggered by the global credit crunch.

"Also in October there was no serious impact of the cyclical slowdown and the situation on the financial markets on the labour market," said Labour Agency chief Frank Frank-Juergen Weise releasing the data.

Speaking during a visit to London, German Chancellor Angela Merkel said the labour market figures were "quite positive" and a "good piece of news in these times."

Merkel said she was pleased that Germany was currently not yet feeling "the effects of the dark clouds" - a reference to the economic crisis.

Brown said it was a "remarkable achievement" that Germany was able to announce a fall of unemployment figures to under 3 million from a peak of 5 million.

The release of the latest German jobless data came in the wake of the publication on Tuesday of a leading sentiment survey showing consumer confidence in the country posting a surprise but modest rise.

But the Nuremberg-based GfK market research institute's survey showed German consumer expectations about the economic outlook dropping to a five-year low.

Indeed, economists believe that unemployment is a lagging indicator and still reflects the strong economic growth rate that the nation posted at the start of the year and predict that the nation's economy will contract as a global economic downturn takes hold.

German business confidence dropped to its lowest level in five years, another key report released this showed amid warnings of layoffs in particular in the nation's car industry.

The drop brought the unadjusted jobless rate down from 7.4 per cent in September to 7.2 per cent in October. Unemployment stood at 8.2 per cent a year ago. (dpa)