The number of unemployed people in Germany rose slightly in July from the month earlier, by 28,000 jobless, to 3.7 million, according to the Federal Employment Agency in Nuremberg.

The 0.1 percent rise in unemployment -- to 8.9 percent of the work force from 8.8 percent -- was smaller than in the previous year, showing the strength of the German economy, analysts said.

Positive indicators

The seasonally adjusted jobless figures, considered a more important indication of the state of the economy, were actually down 45,000 from June. Seasonal adjustment takes into account the number of school-leavers and job-trainees taking an expected break for the summer.

The head of the Employment Agency, Frank-Jürgen Weise, was content. "The three most important indicators -- unemployment, jobs subject to social security and vacant jobs -- have all shown positive changes," he said.

Unemployment in Germany tipped over the five-million mark in
2006 but dropped below four million this year.

But analysts warned however that despite another set of impressive figures, the German labour market appeared to be running out of steam.

Losing momentum?

Sylvain Broyer of Ixis-CIB said he believed the unemployment rate would bottom out next year to about 8.4 percent.

"The German labour market is losing momentum: vacancies now stagnate more or less after having rocketed up to 80 percent year on year in the past years, and regular employment, i.e. employment subject to social security, barely rises above two percent year on
year."

According to European statistics agency Eurostat, their calculation of German unemployment figures for June, at 6.4 percent, were 0.5 percent below the EU average of 6.9 percent. This was a solid improvement from a year earlier, when German unemployment was at 8.3 percent, and well above the then-EU average of 7.9 percent.

EU improves overall

Germany, known as the economic motor of the EU, was not the only country to see improvement. Eurostat said 22 of the 27 member states managed to reduce unemployment for the year. The largest drops were in Poland (down to 10.2 percent from 13.9 percent,) and Sweden (down to 5.3 percent, from 7.2 percent.)

Lowest unemployment was seen in The Netherlands, Denmark, Cyprus and Ireland, with values between 3.3 and 4 percent.