German unemployment rises less than expected in June

BERLIN, July 1 (Reuters) - The number of people out of work in Germany rose far less than expected in June, data showed on Wednesday, allaying fears that the coronavirus pandemic would erode the labour market in Europe’s largest economy.

The Labour Office said an additional 69,000 people were out of work in seasonally adjusted terms, pushing the unemployment rate to 6.4% from 6.3% the previous month.

This meant that 2.943 million people were out of work in June. A Reuters poll had forecast an increase of 120,000, which would have pushed the unemployment rate to 6.6%.

“The labour market remains under pressure from the coronavirus pandemic,” Labour Office head Detlef Scheele said.

He added that the use of short-time work, a form of state aid designed to encourage companies to keep employees on the payroll during a downturn, was having a stabilising effect on the labour market.

Short-time work allows employers to switch employees to shorter working hours during an economic downturn and is intended to stop immediate shocks such as the coronavirus crisis from leading into mass unemployment. (Reporting by Joseph Nasr; Editing by Maria Sheahan)