German Unemployment Rises, Economy Slows

Europe isn't out of the woods yet

German unemployment unexpectedly rose in August for the first time in three months and inflation slowed in a sign that Europe's biggest economy is cooling after a second-quarter surge.

The number of people out of work climbed by a seasonally adjusted 7,000 to 2.95 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted a decline by 5,000 in a Bloomberg News survey. The adjusted jobless rate stayed at 6.8 percent, near a two-decade low. Consumer prices, calculated using a harmonized European Union method, rose 1.6 percent from a year earlier, compared with 1.9 percent in July, the Federal Statistics Office said in Wiesbaden.

Some companies are still cutting jobs as countries in the euro region's periphery struggle to emerge from recession. The labor market is a point of contention among German politicians as they campaign ahead of Sept. 22 elections, with Chancellor Angela Merkel opposing challenger Peer Steinbrueck's pledge to raise taxes.