German unemployment remains stubbornly high

The official unemployment rate fell to 11% from 11.2% as the number of jobless slipped by 94,000 to 4.556 million.

Seasonally adjusted figures, which disregard unemployed students returning to college, also showed an improvement.

"That means the favourable developments observed in the summer have continued," said Federal Labour Office chief Frank Weise.

Problems remain

The fall in Germany's unemployment rate was applauded by analysts, but they were also sceptical about whether this was a real improvement in the labour market.

For one thing, the rise in temporary, part-time work is largely the result of the government's "Hartz IV" labour reforms, which created a class of "one-euro jobs" paying rock-bottom rates designed to get people off the jobless register and into work.

For the next few months we expect that the positive trend will continue, against a background of an improvement in the overall economy Dresdner Bank economist Christiane Seyffart

"One can see that in the clear increase in the number of vacant jobs this year, but to be fair, one also has to point out that the lion's share of that increase is due to state-supported measures such as one-euro jobs," said Hypovereinsbank economist Alexander Koch.

"We still see a decline in the number of jobs paying full social security benefits and an increase in the number of mini-jobs.

"There are thus still reservations among companies to increase in any big fashion the number of full benefits-paying jobs."

Improvements ahead

Looking ahead, this could change, some economists predicted.

New jobs are being created, but are they the right kind of jobs?

"For the next few months we expect that the positive trend will continue, against a background of an improvement in the overall economy, with the job market instruments playing an increasingly smaller role," said Dresdner Bank economist Christiane Seyffart.

"During the course of the year, the number of jobs paying full social security benefits will likely stabilise and the number could even perhaps rise slightly next year," agreed DZ Bank economist Bernd Weidensteiner.

"Only then could we achieve a turnaround in the jobs market."

Despite this, after hitting a post-war high of more than five million earlier this year, the number of unemployed in Germany is likely to remain stubbornly high for a long time yet.

"I don't think you can rule out going over five million again. We could be just below, but joblessness will be around the five million mark," said Ms Seyffart.