German unemployment edges up in August, but job market solid

BERLIN Thu Aug 29, 2013 5:27am EDT

1 of 2. File picture shows a man walking behind the labour office sign of an unemployment centre in Munich January 29, 2009.

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BERLIN (Reuters) - Slightly more people were out of work in Germany in August than a month ago due in part to a summer lull, but the unemployment rate stayed near its lowest since the country reunified more than two decades ago, Labour Office data showed.

The rise contrasted with expectations for a drop of 5,000, but analysts said firms would soon start showing greater inclination to hire as they focused more on the recent rebound in German economic growth than on remaining uncertainty stemming from the euro zone's debt crisis.

Thursday's data showed joblessness rose by some 7,000 to 2.943 million in seasonally adjusted terms in August, the first month-on-month increase since May.

"We were surprised by the rise in the seasonally-adjusted figure. Still this is not a sign for a change of trend," said Eckart Tuchtfeld at Commerzbank. "It can take some months before the better mood in top management will feed through to additional jobs."

Rainer Sartoris of HSBC Trinkaus said "the German economy is recovering. That will feed through to the labour market with delay. There's scope for a small autumn revival."

Labour Office chief Frank-Juergen Weise agreed.

"Companies are hiring less because of the summer holiday. When the holidays are over in the three big federal states, it will get better again," he said.

A bastion of strength in the early stages of the euro zone's debt crisis, the German economy only narrowly avoided recession at the start of the year as a worsening global outlook diminished appetite for its products and willingness to invest.

But it grew at its strongest rate in more than a year in the second quarter and business sentiment hit its highest level in 16 months in August, adding to evidence that it is bouncing back from the brief slowdown.

The non-adjusted number of people out of a job, a politically important figure in Germany, remained below 3 million for the fourth month in a row.

Combined with above-inflation wage hikes and easing price pressures, a solid jobs market is good news for conservative Chancellor Angela Merkel, who is hoping to win a third term in an election on Sept 22.

Preliminary inflation figures are due at 1000 GMT and data from three states suggested annual inflation slowed in August.

Consumer prices rose just 1.6 percent, 1.4 percent and 1.1 percent respectively in Saxony, Bavaria and Hesse in August, down from 2.0 percent, 1.8 percent and 1.7 percent in July.

The median forecast for the pan-German figure is for prices to rise at 1.7 percent on the year after a 1.9 percent gain in the previous month.

German engineering orders, however, fell 3 percent from a year ago and industry association VDMA said it was skeptical whether a 10 percent rise in orders from German investors was already the "beginning of a long hoped-for turnaround".

(This story has been refiled to fix garble in second paragraph)

(Reporting by Annika Breidthardt; additional reporting by Rene Wagner, Reinhard Becker and Sarah Marsh; Editing by John Stonestreet)

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