Fresh figures show that Germany's June unemployment sank slightly compared with the previous month to 8.1 percent. The improvement could give a slight boost to German Chancellor Angela Merkel's reelection bid.
The government has tried to keep unemployment in check
German unemployment for June sank slightly on figures for the previous month, retreating by 48,000 to 3.410 million, according to the Federal Labor Agency figures. That represents a drop of 0.1 percent, to a seasonally adjusted jobless rate of 8.1 percent.
The figures had been the source of fevered speculation prior to their release, as Germany prepares for general elections in September. A rise in unemployment could have boded ill for Chancellor Merkel and her Christian Democrats (CDU).
Government-subsidized short-term work contracts have so far helped companies steer clear of mass layoffs despite weakening export markets and declining consumer confidence at home.
The slight fall in German unemployment reinforces recent economic sentiment surveys pointing to expectations of a turnaround in both the European and the German economies as the year progresses.
Experts have, however warned that unemployment figures could top 4.1 million by the end of 2009, if the German economy follows predictions and contracts by more than 6 percent this year.
There are global concerns that the economic crisis could manifest itself as a jobs crisis by year's end.
Editor: Trinity Hartman