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Business

German Unemployment Rises Again as Recession Bites

Despite signs that the global recession was tightening its grip on Germany, unemployment in Europe's biggest economy rose less than expected in February, data released Thursday, Feb. 26, showed.

Job seekers queue in a job center in Frankfurt, central Germany

The number of Germans out of work rose by 56,000 in January

The Nuremberg-based labor office said the nation's dole queues swelled by a seasonally adjusted 40,000 this month to 3.311 million after the numbers out of work rose by 56,000 in January.

This pushed the unemployment rate up to 7.9 percent from 7.8 percent.

Analysts had predicted the numbers without jobs in February would rise to 60,000 in seasonally adjusted terms, which analysts see as pointing to the underlying labor market trends.

Frank-Jürgen Weise, head of the German Labor Office

Weise was the bearer of more bad news

"Unemployment is rising, employment is declining and the demand for labor is falling," said labor office chief Frank-Juergen Weise.

In the politically more important unadjusted terms, the unemployment rose by 63,000 to 3.552 million, as a result pushing the jobless rate up from 8.3 percent in January to 8.5 percent this month.

A hard winter that curbed construction activity in the biggest European economy played a major role in the rise while a series of announcements by companies about plans for layoffs were also likely to have impacted on the February labor market data.

After resisting the effects of the global economic downturn, the German labor market has deteriorated quickly. In November the number of unemployed dipped briefly below the level of 3.0 million.

And without the widespread use of part-time working hours by German companies the overall deterioration would have been much worse.

Unemployment and economy become election hot topics

Frank-Walter Steinmeier left, in front of the SPD-Logo and Angela Merkel in front of the CDU-Logo

The ruling coalition is gearing up for a potential divorce

The signs of rising unemployment are emerging as Germany's political parties gear up for a national election set for September. The economy and employment situation is likely to be a major battleground with the rival parties already concentrating their fledgling campaigns on the effects of the global economic crisis and Germany's response to it.

With the global economic slowdown gaining momentum, the German government predicts that GDP will shrink by 2.25 percent this year.

But some analysts believe the 2009 contraction could be as much as 4 or even 5 percent.

nda/th (dpa/afp/rtrs)

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