The head of France's main conservative party disowned his colleague Edouard Philippe on Tuesday for taking up the job of prime minister under centrist President Emmanuel Macron.
"Today, we talked about three areas and we will continue doing so later", Merkel said.
His push for reforms aimed at combating unemployment in the country comes "not because Europe requests it, but because France needs it", Macron said.
Merkel, receiving her fourth French president since taking office nearly 12 years ago, told the freshly elected Macron that Germany would be willing to consider changing European Union treaties if necessary. "Macron!" and waving European flags.
Germany and France have traditionally been the motor of European integration, but the relationship has become increasingly lopsided over recent years as France struggled economically.
Indeed, Macron, a former investment banker, will be counting on winning votes for his party from center-right supporters in that round of elections.
Speaking in Berlin on his first foreign visit since his inauguration on Sunday, and at his first joint news conference with German Chancellor Angela Merkel, he also dispelled the idea circulating in German media that he was in favor of turning national debts of euro zone countries into euro-zone debt.
With Germany's economy, Europe's largest, outperforming that of France, the traditional Franco-German motor at the heart of the European Union project has begun to misfire.
His age reinforces the generational shift in France's corridors of power and the image of youthful vigour that Mr Macron is cultivating.
He is also relatively unknown to voters, fulfilling Mr Macron's campaign promise to repopulate French politics with new faces.
Reacting to Mr Philippe's appointment, Mr Juppe called the new prime minister "a man of great talent" with "all the qualities to handle the hard job".
But whereas Mr Macron considers himself left-leaning and got his break under Socialist President Francois Hollande, Mr Philippe has worked his way up internally through the conservative Republicans party.
But not everyone was pleased with the Philippe announcement.
There, the 39-year-old leader urged a "historic reconstruction" of Europe to battle populism sweeping the continent, following his defeat of far-right leader Marine Le Pen.
Defeated by a Macron landslide, she denounced what she predicted would be a continuation of old policies, including "austerity, submission to Brussels, massive immigration".
Picking him would send a clear signal that Macron hopes to attract other young modernisers from the Republicans to his new centrist party, La Republique en Marche (Republic on the Move, REM), which will contest parliamentary elections in June.
There was a warm welcome for the new French president both from Angela Merkel and - unusually - a crowd singing and dancing outside the chancellory.
Leftist firebrand Jean-Luc Melenchon said that Philippe's appointment as premier showed the right had been "annexed" by the tentacular Macron.
"Don't give full powers to Mr Macron and his prime minister".
'That is going to be easier said than done, it appears, with United States production running at its fastest pace since August 2015 and data yesterday confirming that Chinese growth momentum continues to moderate, ' ANZ strategists wrote in a daily note.
Germany is looking to Mr Macron to revitalise France as an economic power and political heavyweight in the European Union, which is facing complex divorce proceedings with its current number two economy, Britain.
Merkel and Macron want to kick-start ties with an alliance some German media have dubbed "Merkron", stressing that the European Union is resilient despite Britain's vote to leave and a spate of financial and migration crises that have boosted the far-right across the bloc.
Merkel, 62, has been chancellor since late 2005, when Jacques Chirac was French president.