(Bloomberg) --

German unemployment extended its decline in November as businesses added staff to work off a backlog in orders.

Unemployment in Europe’s largest economy fell by 34,000, beating economists’ forecast for a drop of 25,000. That pushed the jobless rate to 5.3%.

“Consequences of the current, worrying corona situation in Germany have hardly shown up so far,” Federal Labor Agency chief Detlef Scheele said in a statement.

Germany’s labor market benefited from a surge in global demand following the end of widespread pandemic lockdowns. Supply bottlenecks, however -- also a result of stronger demand -- have weighed on production and are pushing a large part of the country’s economic recovery into next year. 

More recently, risks to the economy have increased amid a surge in coronavirus infections and the reintroduction of some curbs to activity, which could hurt hiring in the services sector going forward. 

Talks between German federal officials and the 16 state premiers on how to check the latest surge in infections are due Tuesday. Robert Habeck, who will serve as a vice chancellor in the new government, called for a nationwide “lockdown for the unvaccinated.” 

Soaring prices are also mounting pressure on German businesses, with a separate report on Monday showing inflation of 6% in November. 

European Central Bank officials are less than three weeks away from a crucial meeting to set the course for post-crisis monetary policy, at which they will determine how much more stimulus to provide for the region’s recovery without risking entrenched higher inflation rates.

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