September 20, 2012 / 11:53 AM / 5 years ago

German jobless to rise in election year 2013: study

BERLIN (Reuters) - German unemployment is set to rise in 2013 after three years of decline, a study showed on Thursday, handing the opposition a useful campaign weapon as Chancellor Angela Merkel bids for a third term in power.

As the euro zone debt crisis saps economic momentum in Germany the average number of jobless will rise next year by some 40,000 to 2.94 million, after falling by 80,000 in 2012, according to estimates by the Institute for Labour Market Research (IAB), the Federal Labour Office’s think-tank.

The study said the number of people in employment would increase by 200,000 as immigration brings more people become to the labour market.

German joblessness rose for a fifth month running in August, although it still remains close to a post-reunification low. The Federal Labour Office has acknowledged that slowing growth is beginning to take its toll on what has been one of Europe’s most resilient jobs markets.

A survey released earlier on Thursday showed staffing levels in Germany’s services sector fell in September for the first time since April, as companies faced a lack of new orders and became more pessimistic about their future prospects and backlogs of work fell.

Gross domestic product (GDP) growth slowed to 0.3 percent in the second quarter as companies, nervous about the debt crisis sweeping southern euro zone states, cut back on investments.

Many economists are expecting GDP to contract in the third quarter of the year, with Germany possibly even entering a technical recession - defined as two consecutive quarters of falling GDP - in the latter half of 2012.

Reporting by Alexandra Hudson; Editing by Robin Pomeroy

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