Official figures from the Federal Labor Office show Germany's unemployment rate was 8 percent in September, down from 8.3 percent one month earlier. The improvement has been attributed largely to a traditional autumn upturn in the labor market rather than fundamental improvements in the economy.

The numbers out of work in Europe's biggest economy dropped by 125,000 to 3.346 million this month, the Nuremberg-based labor office said Wednesday. Analysts had predicted a rise of 20,000.

However, labor office head Frank-Juergen Weise warned that the latest data did not represent a turning point in the nation's job market.

"The effects of the economic crisis on the labor market remains noticeable," he said.

Future policy

The release of the latest unemployment data comes as Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) prepares for talks with the pro-business Free Democratic Party (FDP) to forge a new coalition government after Sunday's national election.

Goldman Sachs economist Dirk Schumacher told AFP news agency he believed "dismissal protection" policy would be a sore point in the upcoming policy talks between the new CDU and FDP coalition partners.

He said: "The FDP election platform demands meaningful changes to the current regime while Chancellor Merkel apparently made a promise to unions not to touch the current framework."

Blue skies?

The drop in seasonally adjusted unemployment in September followed a surprise 1,000-fall in in August.

Government subsidies which allow firms to cut working hours has thus far prevented a flood of jobless claims, though experts have warned the number of people out of work could swell in coming months.

Germany has nonetheless rebounded from its worst recession in more than six decades more quickly than expected , edging back to growth in the second quarter of this year with expansion of 0.3 percent.

That could help companies avoid outright redundancies, although a report in the daily newspaper Die Welt said Wednesday that Germany's biggest bank, Deutsche Bank, wants to eliminate or farm out 1,300 German jobs.

bn/AP/AFP/dpa
Editor: Sam Edmonds