The seasonally adjusted rate dropped to 5.2 percent from 5.3 percent the previous month, the BA federal labour agency said, the equivalent of 23,000 fewer unemployed people.
“The recovery seen in recent months continued in December,” agency head Detlef Scheele said in a statement.
In raw figures, the number of unemployed sat just under 2,330,000, down around 378,000 since December 2020.
Unemployment in Europe’s top economy climbed as high as six percent in the months following the rapid spread of the coronavirus through Europe in the first half of 2020.
Germany has relied heavily on subsidised short-term work schemes to help businesses and workers whether the pandemic storm, with nearly six million Germans placed on reduced hours at the peak of the crisis in April 2020.
The scheme was still supporting some 710,000 people according to the latest available figures from October, the BA said.
An uptick in applications made for the short-term work scheme at the end of the year showed the “uncertainty” caused by rising numbers of coronavirus cases and the emergence of the highly transmissible Omicron variant, the BA said.
Around 286,000 people were signed up to the programme in December, up from 104,000 the month before.
The overall improvement in the job market over 12 months was “encouraging” but “the new virus variant will be a difficult test for the German economy,” said Fritzi Koehler-Geib, chief economist at public lender KfW.