/www.bloomberg.com/ By Friederike Truemper, Andreas Cremer and Brian Parkin
Berlin, Oct. 8 (Bloomberg) -- German unemployment remained near a three-year high in September as an economic recovery faltered, deterring companies from hiring.
Joblessness fell by a seasonally adjusted 1,000 from August to 4.1 million, the Federal Labor Office said, the first decline in six months. The unemployment rate stayed at 9.8 percent, the Bundesbank said.
``We've put off any hirings for now,'' said Sieglinde Bartossek, personnel manager at the German unit of Mattel Inc., the world's largest toymaker. ``Quite honestly, the present business environment doesn't give us any reason to expand our labor force.''
Europe's largest economy is struggling to recover from last year's recession. Business confidence fell to an eight-month low in September. The benchmark DAX index of German stocks slumped to a six-year low, bringing the decline this year to 50.1 percent.
The government last week sliced one percentage point off its economic growth forecast for next year, predicting expansion of 1.5 percent. It expects growth of 0.75 percent this year.
The DAX index fell 3.5 percent to 2574 at 5:42 p.m. Berlin time. The euro dropped to 97.98 U.S. cents from 98.28 yesterday.
Clement Appointed
Chancellor Gerhard Schroeder, who won a second term in elections last month, has pledged to cut unemployment by speeding job placements and boosting job centers' efficiency. He yesterday appointed North Rhine-Westphalia's prime minister, Wolfgang Clement, to take over a combined Economics and Labor Ministry.
Schroeder said welding the two ministries is ``sensible'' as he seeks to push through proposals to ease labor market regulations and increase the efficiency of job centers.
``Clement will act as a reformer in his new job,'' said Florian Gerster, head of the Federal Labor Office, at a press conference in Nuremberg. ``He will take advantage of the effects of pooling economic and labor market policies.''
Some companies are firing. Deutsche Telekom AG, Europe's largest telecommunications company, said last week it plans to shed 29,500 jobs through 2005 in efforts to trim costs after piling up debt. Schuler AG said two weeks ago it will shed 400 more jobs to offset losses inflicted by falling orders and sales.
``The economy is almost stagnating,'' said Heinz Grimm, an economist at Bankgesellschaft Berlin AG.
Interest Rates
MobilCom AG, the mobile-phone company that was bailed out by Schroeder's government, said it will eliminate 2,100 of a 5,000- workforce to offset growing costs.
The economy probably won't get help from the European Central Bank any time soon. ECB President Wim Duisenberg, speaking to European lawmakers in Brussels, said the bank's benchmark lending rate will likely stay at 3.25 percent when policy makers meet on Thursday.
The dozen countries sharing the euro need ``stability'' to recovery from the slowest growth in nine years, he said.
Adjusted for European Union standards, the German unemployment rate was unchanged at 8.3 percent, the average rate for the dozen countries sharing the euro in August. In the U.S., economists predict that joblessness will rise to more than 6 percent by the first quarter of next year.
Gerster said average unemployment will be ``slightly'' above 4 million this year. By the end of 2002, joblessness will be ``significantly above'' that number, without taking seasonal factors into account, he said.
``The expected economic recovery is further delayed,'' the Labor Office said in a statement. ``The recently favorable development stems from the effects of government job-creation programs. Without such activities, seasonally adjusted unemployment would have risen further.''
Unemployment in western Germany, which accounts for 94 percent of national output, rose a seasonally adjusted 8,000 to 2.69 million. The number of people out of work in eastern Germany fell 9,000, the Federal Labor Office said.