German unemployment set to rise as recession tightens its grip

German unemployment set to rise as recession tightens its gripBerlin - German unemployment edged up again in April, official data released Thursday is forecast to show, amid expectations that the nation faces a surge in the numbers out of work as global recession hits the jobs market in Europe's biggest economy.

Analysts expect the Federal Labour Agency will say seasonally adjusted unemployment, which reflects overall trends in the job market, climbed by another 60,000 this month after rising 69,000 in March.

This will push the German jobless rate up to 8.2 per cent this month compared to 8.1 per cent in March.

It also raises the risk of Chancellor Angela Merkel's government heading into an election set down for September against the backdrop of sharply rising unemployment.

"We have a very difficult situation," said Deutsche Bank economist Stephan Bielmeier. "No signs of improvement are expected."

However, warmer spring weather means that the politically sensitive seasonally unadjusted could fall by about 25,000 in April to about 3.56 million.

But this is considerably less than the falls in unemployment chalked up during the same month in previous years. Seasonally unadjusted unemployment fell on average by 140,000 in April during the three previous years.

Up until now, government subsized short-term work contracts have helped companies avoid mass lays offs despite the weakening economic conditions.

However, economists also warned that the numbers out of work could climb to 4.1 million by the end of the year with the German Government saying Thursday it expects the nation's economy to contract by a dramatic 6 per cent this year.

This underscores concerns around the world that the economic crisis would transform itself into a jobs crisis by the end of the year.

The expected rise in German unemployment is also despite a steady stream of forward-looking economic sentiment surveys pointing to expectations of a turnaround in both the European and the German economies as the year unfolds.

But Berlin now expects the nation's jobless queues to swell by 450,000 to average 3.7 million this year before jumping by 900,000 to about 4.7 million in 2010. (dpa)

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