"It is in our interest not to fall behind other world regions such as the Asian region which has concluded such an agreement with the United States," the conservative leader told public broadcaster NDR.
"I believe that such an agreement would mean job opportunities for us and we urgently need jobs in Europe."
Last weekend her centre-left vice chancellor and economy minister, Sigmar Gabriel, said the talks on the so-called TTIP agreement were effectively dead, and French junior trade minister Matthias Fekl called Tuesday for a halt to the talks.
Merkel, asked about Gabriel's comments, said it was "at least unusual" to declare the talks failed just as they were entering their final stretch.
The European Commission and US negotiators began work on the Transatlantic Trade and Investment Partnership in 2013, aiming to create the world's biggest free trade market of 850 million consumers stretching from Hawaii to Lithuania.
A deal was supposed to be concluded before US President Barack Obama leaves office in January, but the talks have become bogged down amid widespread suspicion in the EU that a deal would undercut the bloc's health, consumer safety and environmental standards.
Another issue that has raised hackles is plans for a special court to speed up companies' cases against governments over breaches on regulatory issues, which opponents see as giving powerful firms a veto over public policy.