German unemployment rises in July

Germany's carmakers have suffered with a slump in demand

Unemployment in Germany rose in July, official figures have shown, and economists have warned that the worst still lies ahead for the job market.

The number of people out of work rose by 30,000 in July to more than 3.5 million on a seasonally adjusted basis. The jobless rate remained at 8.3%.

But taking into account one-off effects, unemployment fell by 6,000, the Federal Labour Office said.

Some analysts predict unemployment will approach 4.5 million next year.

Experts say a government scheme subsidising firms to cut working hours instead of making mass redundancies has so far helped to prevent a steep rise in unemployment.

But some fear the effect will be short-lived.

"We expect adjusted unemployment to still rise heavily towards 4.5 million by mid-next year," said Alexander Koch from Unicredit, noting that most workers on the government's short-term work hours scheme were likely to eventually end up out of work.