German unemployment adjusted for seasonal factors rose by a higher-than-expected 7,000 in July, tempering recent optimism that Europe's largest economy is on the verge of a recovery.
The Federal Labour office said seasonally adjusted unemployment rose to 4.408 million in July, keeping the adjusted jobless rate steady at 10.6 per cent.
The Labour office said the unemployment rise was kept relatively moderate because of recent measures aimed at getting people back into work, rather than any improvement in the economy.
The figures back economists' warnings that despite a recent improvement in German sentiment indicators suggesting a recovery is on the way, the fundamentals remain weak. They said the widely expected upturn later this year and in 2004 would not be strong enough to halt rising unemployment.
The July jobless data dampens recent growing optimism that Germany is gradually emerging from three years of stagnation and coincides with a poll showing Germans are becoming increasingly pessimistic about the chances of an upturn.
According to the poll published by Sternmagazine today, 42 per cent of 2,508 people surveyed by research group Forsa said they believed the German economy would deteriorate this year, with only 30 per cent expecting an improvement.