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German March jobless rate rises unexpectedly

The number of Germans out of work rose unexpectedly by 30,000 in March, due in part to unusually cold weather, pushing the seasonally-adjusted jobless rate up to 11.4%, the Federal Labour Office said today.

The data, which also showed a smaller-than-expected dip in the politically-sensitive unadjusted jobless total to 4.976 million, were a disappointment to the government of Chancellor Angela Merkel which has made cutting unemployment its top priority.

Economists have grown more optimistic about the German economy in recent months and some are forecasting growth of 2% this year. On Tuesday, the closely-watched Ifo business climate index shot up to a 15-year high.

But the Labour Office said today that the positive growth trend was not having a noticeable impact on the jobs market, where firms remain reluctant to take on new workers.

'The development of economic indicators points to a continuation of economic growth in 2006. However, the economic impulses were not yet strong enough for a fundamental improvement in the labour market,' the Office said. 'While there are positive signs in the trend in unemployment and vacancies, there is no sign of a general pickup in hiring,' it added.

All the headline numbers in the March jobless report were weaker than expected. Forecasts had predicted a 6,000 drop in the adjusted jobless total. The adjusted jobless rate was forecast to hold steady at 11.3%. The 30,000 rise brought the adjusted jobless total to 4.73 million. On a seasonally-adjusted basis, vacancies fell by 3,000 month-on-month to 462,000.

The Labour Office said the weather, which remained unseasonably cold throughout the first half of March, was partly to blame for the jobless rise and suggested that a downward correction would be forthcoming in April.

'The seasonally-adjusted gain in unemployment in March was a result of the unusually cold and snowy weather which can't be sufficiently accounted for in the seasonal adjustment,' the Office said. 'The usual decline in seasonal unemployment will be partly delayed until April,' it added.