German unemployment fell unexpectedly by 3,000 in December for the sixth consecutive month as Europe's largest economy continues to recover from recession.

However, economists warned that unemployment could rise again later this year as job losses catch up with the scope of the downturn in German output. The Federal Labor Office said 3.421 million Germans were out of work in December, reflecting a seasonally adjusted decline of 3,000 from November.

Economists surveyed by Dow Jones Newswires had expected a seasonally adjusted increase of 10,000. The Labor Office noted that without special one-time effects, the adjusted jobless total would have risen by 6,000.