The number of people in work in Germany increased by 416,000 or 1.0 percent to an annual average 41.5 million last year, the sixth annual record in a row, the national statistics office Destatis calculated.
"The rise in employment in the second half of the year was nevertheless not quite so strong as in 2011," the statisticians cautioned.
At the same time, the annual average jobless total declined by 162,000 to 2.34 million last year, Destatis said.
That meant the jobless rate -- which measures the number of people out of work as a proportion of the working population as a whole -- declined to an annual average 5.3 percent for 2012 from 5.7 percent in 2011.
December jobless data, calculated by the federal labour office, are scheduled to be published on Thursday.