German Companies Slow Hiring Spree as Economy Cools

The number of people without work in Europe's biggest economy rose by 50,000 in July, to a total of 3.21 million people unemployed, Germany's federal labor office announced on Thursday, July 31. The jobless rate was up 0.2 percent to 7.7 percent.

This was, however, 505,000 less than the numbers out of work in unadjusted terms in July last year, when the unemployment rate stood at 8.9 percent. In seasonally adjusted terms, unemployment fell by 20,000 to 3.25 million.

The number of unemployed had been shrinking fast in recent months, falling below 8 percent in May for the first time in 16 years.

Releasing the data, Labour office chief Frank-Juergen Weise said developments on the labour market remained positive despite signs that it was losing some of its momentum. He said that employers' demand for workers remained high.

But a steady stream of data and economic sentiment surveys have pointed to the nation's economy losing steam amid fears that inflation has been picking up on the back of high food and energy costs.

Minimal economic growth expected

German business confidence dropped to near a three-year low in July, according to a key survey drawn up by the Ifo Institute for Economic Research and released this month.

"These results suggest the economic upswing is coming to an end," said Ifo chief Hans-Werner Sinn, releasing the latest report.

While German exports recorded their biggest fall in about four years in May, factory orders fell for the sixth consecutive month in May and industrial production also dropped sharply.

This points to economic growth sliding during the second quarter after a strong start to the year.

The most pessimistic forecasts are for German economic growth to slow to 0.7 percent during the three months to the end of June.