Unemployment Falls

According to raw unadjusted data released on Thursday by the Federal Labor Agency in Nuremberg, the August jobless rate dipped by 0.1 percent to 8.8 percent or 3.705 million -- down from 3.715 million in July.

"The good economic situation continues to have a positive effect on the labor market," said labor agency head, Frank-Jürgen Weise.

"The number of jobs with full social benefits is growing and the number of unfilled posts is still high."

However, the latest unemployment figures were still higher than June's unemployment rate of 3.687 million.

Effects of US financial crisis

Weise also warned that the upheaval in the US housing sector could still have a delayed repercussions on the labor market, causing a rise in unemployment.

Adjusted for seasonal swings, such as summer hires and vacation staffing, the jobless rate remained unchanged at 9 percent from July and at its lowest rate in 14 years.

The more economically depressed former east Germany has failed to benefit from Germany's economic growth, with the jobless tally rising by 7,000. In comparison in western Germany, the number of unemployed fell by 22,000.

Skilled labor sought

In August, the Federal Labor Agency recorded more than one million job vacancies, many of which were for skilled tradesmen such as electricians, metalworkers and engineers.

Commenting on the release of this month's figures, Federal Employment Minister Franz Müntefering said he expected the jobless rate to continue its downward trend.

"Those who have work can be virtually assured of keeping it," he said. "Those who are unemployed have a good reason to hope to find work."

Müntefering also said he expected the number of long-term unemployed to decrease because of the current positive business climate.

Atlhgough business confidence fell in August due to the recent round of global financial turmoil, the latest business climate index released by the Ifo Economic Research Institute on Tuesday showed executives were generally optimistic about the coming six months.

The General Secretary of Angela Merkel's Christian Democrats, Ronald Pofalla said Germany's economic upturn was helping to reduce structural unemployment but that the government had to have "the courage to continue with economic reforms."

Pofalla said this should include the sinking of unemployment insurance contributions to 3.5 percent.

Currently, Germany's coalition government has agreed to reduce the contribution rate from 4.2 percent of 3.9 percent.