Recession hits German job market (1st Lead)

Berlin - German unemployment rose less than forecast in June, official data released Tuesday showed. Nonetheless, the news did little to ease concerns about an economic recession hitting Germany. The Federal Labour Agency said seasonally adjusted unemployment, which reflects overall trends in the job market, climbed by 31,000 this month to 3.495 million. Analysts had forecast a 40,000 rise in the numbers out of work. 'The recession in Germany has hit the spring pickup (in the labour market,' said labour agency chief Frank-Juergen Weise. Experts generally expect the nation to face a surge in the numbers out of work as the global recession hits the jobs market in Europe's biggest economy. Signs of increasing unemployment also raise the risk of Chancellor Angela Merkel's government heading into September's general election against the backdrop of lengthening jobless queues. While in the politically important unadjusted terms, the numbers out of work fell 48,000 to 3.41 million, the decline was less than during springtime in previous years, when employers often boost their workforces. Indeed, there were 250,000 more jobless in June this year than in the same month last year. The seasonally unadjusted unemployment rate slipped from 8.2 per cent in May to 8.1 per cent. A year ago the rate stood at 7.5 per cent. Up until now, government subsidized short-term work contracts have helped companies avoid mass layoffs despite the weakening economic environment. But economists have warned that the numbers out of work could climb to 4.1 million by the end of 2009. The German economy is expected to contract by a dramatic 6 per cent plus this year. This underscores concerns around the world that the economic crisis could transform itself into a jobs crisis by the end of the year. The rise in German unemployment comes also despite a steady stream of forward-looking economic sentiment surveys pointing to expectations of a turnaround in both the European and the German economies as the year unfolds. However, a slew of bleak economic data continues to underscore the fallout for Germany as a result of the global recession, with factory order books, as well as production, shrinking and exports slumping. Indeed, Berlin now expects the nation's jobless queues to swell by 450,000 to average 3.7 million this year before jumping by 900,000 to about 4.7 million in 2010.