(Bloomberg) -- German unemployment unexpectedly fell as Europe’s largest economy showed resilience just as Europe’s energy crisis inflicts a likely recession.  

Joblessness dropped by 13,000 in December, the Federal Labor Agency said in a statement on Tuesday. All 15 economists surveyed by Bloomberg anticipated an increase. The unemployment rate was 5.5%, also better than expected.

While the German economy is suffering from the fallout of Russia’s war in Ukraine, the mood has brightened in recent weeks as inflation shows signs of peaking and disruptive shortages of natural gas will probably be avoided. 

Bundesbank President Joachim Nagel has said he’s optimistic that the country can escape a severe slump. Surveys of purchasing managers by S&P Global this week also confirmed that the downturn in Germany’s important manufacturing sector is easing, with supply-chain frictions that bogged down the sector during the pandemic increasingly fading. 

The labor market has remained stable despite fears of a recession, with employment last year reaching the highest level since the reunification of Germany in 1990.

An increase in jobless numbers has been attributed to the integration of Ukrainian refugees. On an annual basis, unemployment would have been lower in December if that influx hadn’t happened, officials said.

A growing number of companies are struggling to find staff, and labor unions are managing to secure stronger wage deals to partly make up for the fastest inflation in decades. 

Data later on Tuesday will show that German consumer-price growth slowed for a second month in December, according to economist forecasts.

--With assistance from Kristian Siedenburg and Joel Rinneby.

©2023 Bloomberg L.P.