“The labour market remains robust, despite the current economic weakness,” said the head of the Federal Labour Agency, Frank Weise, publishing new data on Wednesday.

The German economy, the biggest in Europe, contracted by 0.2 percent in the fourth quarter of 2011, but forward-looking indicators suggest the pause in growth may prove short-lived.

The German Institute for Economic Research (DIW) said on Wednesday it expected the first quarter of 2012 to be stable, with no growth, but no shrinkage. “The German economy has narrowly scraped passed a recession,” said DIW researcher Ferdinand Fichtner.

“Employment is rising strongly. And unemployment hardly changed at all, despite the unusually cold weather since mid-January. Demand for labour remains high,” Weise said.

Germany is faring better than its eurozone partners in the current crisis, thanks to deep and painful economic restructuring and a huge shake-up of its labour market undertaken during the last decade or so.

With record low unemployment, domestic demand has taken over from exports as the engine of the German economy, shoring it up against any downturn in exports as a result of the crisis.

While headline unemployment actually increased this month, with the jobless rate rising fractionally to 7.4 percent, that was due to seasonal factors, such as the winter weather which forces key sectors such as the construction industry to lay off workers.

Taking such factors into account, the jobless total actually showed no change at 2.866 million, according to separate data calculated by the Bundesbank. And the seasonally-adjusted jobless rate held steady at 6.8 percent in February.

The figures were slightly weaker than expected: analysts had been pencilling in a further decline in the jobless total this month.

But Annalisa Piazza of Newedge Strategy insisted the number was “not too bad.”

“In the past few months, the improvement of the labour market was surprisingly strong, despite signs of moderation in activity,” she said.

“As such, we would see today’s figures as a sign of ‘normalisation’ as the business cycle is far from its peak, even in the super-resilient Germany.”

Piazza ruled a sharp turn-around anytime soon.

“Indeed, there are clear signs that the labour market is still moving in the right direction,” she said.

Carsten Brzeski at ING Belgium saw the data as a signal “that the German job miracle is gradually coming to an end.”

Looking ahead, all available indicators still pointed to a further improvement in the German labour market, he said.

“However, the strong dynamics of last year will not be repeated this year. With lower growth and an unemployment rate close to the natural rate, the job miracle should gradually come to an end, entering a period of consolidation,” Brzeski said.

Christian Schulz, senior economist at Berenberg Bank, believed “the underlying positive trends in the German labour market remained intact.

“However, some signs of a slowing dynamic were also reported,” he cautioned.

“With business and consumer confidence rebounding, Germany’s economy is set to grow from the second quarter onwards, which should provide further stimulus to the labour market as well,” the economist said.

“However, at record low unemployment levels, finding suitable candidates will continue to be an issue for German companies and drag on overall growth,” he concluded.

Heinrich Bayer at Postbank predicted a stagnation in the labour market in the coming months.

But Natixis economist Felix Eschwege said he was pencilling in “a further improvement of the unemployment rate in the ongoing year to an overall rate in 2012 of 6.7 percent.”

AFP/The Local/hc