German Unemployment Rises More Than Forecast

(RTTNews) - Germany's unemployment increased more than expected in July as the weaker economy damped job creation at the onset of summer break.

The number of people out of work increased 18,000 from June, when joblessness climbed sharply by 20,000, data from the Federal Labor Agency showed on Wednesday. The July's increase was bigger than forecast of 15,000.

The jobless rate held steady at 6.0 percent in July, in line with expectations.

Compared to the same month last year, the number of unemployed was 192,000 higher. Unemployment totaled 2.81 million.

The increase in unemployment showed that the slow but gradual cooling of the labor market continues, ING economist Carsten Brzeski said.

The cooling labor market could be one reason why, despite the strongest real wage growth in more than a decade, private consumption will remain subdued in the second half of the year, the economist added.

The weak economic development is putting a strain on the labor market, agency board member Daniel Terzenbach said. Unemployment and underemployment rose more than usual at the beginning of the summer break, the official said.

Elsewhere, data from Destatis, based on the labor force survey, showed that the unemployment rate remained unchanged at adjusted 3.4 percent in June. The number of unemployed persons increased only by 2,000 on month to 1.50 million.

Economic data released thus far this week have raised concerns regarding the biggest euro area economy. GDP data released this week showed that the economy shrank unexpectedly by 0.1 percent in the second quarter, reversing the first quarter's 0.2 percent expansion.

Germany's flash consumer price inflation accelerated in July, casting doubts on the chances of an interest rate cut in September. Inflation rose to 2.3 percent in July from 2.2 percent in June, data showed on Tuesday.