German unemployment fell much less than expected last month, raising fears that the labour market could be flagging.
The number of people unemployed dropped 15,000, on a seasonally adjusted basis, to 3.75 million, keeping the unemployment rate hovering at 9%.
But the fall was half what analysts were expecting and some fear the recent turmoil on global stock markets may have made firms more reluctant to hire.
The German economy has shown strong signs of recovery in the past year.
Germany's Labour Office chief Frank-Juergen Weise noted the fall in the official jobless numbers was a reflection of the "good economic conditions" in the country.
He highlighted the high number of vacant positions and the increase in the number of jobs paying full benefits, insisting that the credit problems afflicting the financial markets would not upset the positive outlook for German employment in the "short to mid-term".
Optimistic outlook
Some analysts blamed the disappointing fall on the holiday season when business is typically slow.
"Although the decline in August was less than expected, the outlook for a continuation of the solid labour market upswing remains optimistic," said Alexander Koch, an economist at Unicredit.
"Assuming no dramatic slowdown of the global growth dynamic due to the current financial market turbulence, the jobless rate is expected to remain steady without any major upward swings."
The pickup in Germany's economy follows years of stagnant growth and a double-digit unemployment rate, which peaked in 2005 at more than 12%.
The recovery has been fuelled by increasing demand abroad for its motorcars, computer chips and home appliances and a growing willingness for consumers to spend. This has motivated companies to expand their workforce.
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