German unemployment rises more than expected in July, labour office data shows
Adds details in paragraphs 3-4, analyst in paragraphs 8-9, Ifo in paragraph 10
BERLIN, July 31 (Reuters) -The number of people out of work in Germany rose more than expected in July in the latest sign of the challenges facing Europe's largest economy, Federal Labour Office figures showed on Wednesday.
The office said the number of unemployed grew by 18,000 in seasonally adjusted terms to 2.8 million. Analysts polled by Reuters had expected that figure to rise by 15,000.
The seasonally adjusted job rate remained stable at 6.0%.
"The weak economic development is weighing on the labour market," said the labour office's Daniel Terzenbach.
"At the beginning of the summer break, unemployment and underemployment rose more sharply than usual."
Germany's economy, the worst performing major economy last year, has struggled to recover after high energy costs, feeble global orders and record high interest rates took their toll.
The situation remains gloomy as the economy unexpectedly contracted in the second quarter after skirting a recession at the start of the year, the statistics office said on Tuesday.
"The strong labour market has been an important driver of the economy's resilience over the last few years," said ING economist Carsten Brzeski. That, however, was not enough to prevent the weakening of private consumption this and last year, he said.
"Looking ahead, the ongoing increase in the number of insolvencies combined with fading recruitment plans both in manufacturing and services does not bode well for labour market developments in the coming months," Brzeski said.
The Ifo economic institute's employment barometer fell to 95.4 points in July, its worst value since February. Only service providers are still hiring new staff in some cases, but fewer than the previous month, according to the Ifo survey released on Wednesday.
Reporting by Holger Hansen, Rene Wagner and Miranda Murray, Editing by Rachel More and Tomasz Janowski
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