(Adds comments about unemployment among foreigners and an increase in the minimum wage.)

By Nina Adam

FRANKFURT-German jobless claims dropped sharply in December and the unemployment rate remained at a record low, cementing Germany's position as the eurozone's strongest labor market.

The BA labor agency said Tuesday that jobless claims fell by 17,000 from November, adjusted for seasonal swings. Economists polled by The Wall Street Journal had forecast a decline of just 5,000.

The adjusted jobless rate, meanwhile, remained at the lowest level since the beginning of the data series in January 1992, following Germany's unification. It stood at 6.0% in December.

Frank-Juergen Weise, the agency's head, said that Europe's largest labor marketcontinued its solid run, despite a noticeable easing in employment creation since the summer.

On average, 2.691 million people were unemployed in 2016, which was the lowest number since 1991, he said. An increase in joblessness in 2017 is not expected.

But while more Germans have found a job over the past 12 months, unemployment among foreigners has risen sharply, led by exploding joblessness among migrants from war-torn countries in the Middle East and Africa.

"The effects of forced migration on the labor market are increasingly visible," the BA said.

Another factor kicking in this year is an increase in Germany's minimum wage to 8.84 euros ($9.26) per hour on Jan. 1 from EUR8.50 previously.

While most economists don't expect a significant near-term impact from a higher minimum wage, Clemens Fuest, president of Germany's Ifo Institute, cautioned about its longer-term consequences. "Germany can only integrate the large number ofimmigrants into its labor market if wage costs do not rise too quickly," he said.

Christine Popp in Nuremberg contributed to this article.

-Write to Nina Adam at nina.adam@wsj.com

(END) Dow Jones Newswires

January 03, 2017 05:59 ET (10:59 GMT)

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