Berlin - German unemployment fell in September, the nation's labour office said Wednesday as a result adding to hopes that economic recovery will gain ground in the coming months. The numbers out of work in Europe's biggest economy dropped by 12,000 to 3.46 million this month, the Nuremberg-based labour office said. But taking into account statistical changes, unemployment rose 10,000 during September, officials said.
Releasing the data, labour office chief Frank-Juergen Weise warned that the latest figures did not represent a turning point in the nation's job market.
"The effects of the economic crisis on the labour market remains noticeable," he said.
Analysts had predicted a rise of 20,000 in the numbers out of work September. The drop in September followed a downwardly revised 6,000- fall in August.
The September decline is a further sign that the German labour market has so far managed to withstand the fallout from the global economic contraction as Berlin continues to roll out a 85 billion- euro (124-billion-dollar) fiscal stimulus plan.
However, forecasts that unemployment is set to rise next year could place pressure on German Chancellor Angela Merkel's conservative Christian Democrats as they prepare for talks with the pro-business Free Democrats (FDP) to forge a new coalition government.
The FDP have set out plans for a round of tough economic reforms, including big changes to Germany's labour market.
With Germany having emerged from recession during the second quarter, economists are expecting a solid gain in the nation's economic growth rate in the coming months, which could further help to underpin the labour market in the runup to the end of the year.
But economists also warn that German unemployment could rise next year as the recession catches up with the nation's labour market as government moves to wind back its anti-crisis spending programme and labour-market support schemes.
This in turn could raise doubts about the prospects of the German economy mounting a sustained recovery with rising job fears and weak wages growth undercutting private consumption.
"We expect a rise in unemployment next year," said Commerzbank economist Eckart Tuchfeld.
Wednesday's labour office data also showed the numbers out of work in seasonally unadjusted terms dropped by 125,000 to 3.346 million in September resulting in the jobless rate sliding from 8.3 per cent in August to 8 per cent this month. Seasonally unadjusted unemployment stood at 7.4 per cent in September 2008.
While the seasonally unadjusted unemployment rate in the eastern part of Germany edged down from 12.8 per cent in August to 12.3 per cent this month, the jobless rate in the more economically significant western half of the nation slipped from 7.1 per cent to 6.9 per cent.
Until now, government-subsidized short-term work contracts have helped German employers avoid large-scale layoffs as a result of what has been the nation's steepest economic slowdown in a generation.
About 1.42 million workers were on short-term contracts in June, the labour office said.
But warned Annelie Buntenbach, a leader of Germany's trade union movement DGB: "The decline in new registrations for short-time work contracts in recent months have raised fears that we could face a wave of dismissals."
Underscoring the current fragile state of the nation's recovery, Germany's key mechanical engineering industry published another downbeat set of data on Wednesday.
Badly hit by the global economic crisis, the industry association (VDMA) said mechanical engineering orders slumped by a real 43 per cent in July.
The VDMA however expressed optimism that the trough might have been reached.
