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FRANKFURT AM MAIN: Germany's largely resilient labour market showed early effects of a gathering slowdown in July, official data showed Wednesday, as authorities highlighted falling demand for new workers and employment growth petering out.

Federal labour agency (BA) chief Detlef Scheele said in a statement that "companies' demand for new employees fell back slightly and employment continued rising, but with less momentum than before".

Seasonally-adjusted figures showed five percent of people out of work this month, the same level as in May and June.

But in absolute terms -- widely referenced in public debate but less representative of underlying trends -- unemployment increased 0.1 percentage point month-on-month, to 5.0 percent or 2.3 million people out of work.

Germany's economy returned to growth in the first six months after brushing past a technical recession, defined as two consecutive quarters of shrinkage, in late 2018.

A range of forecasts from government, the central bank and organisations like the International Monetary Fund point to sluggish economic expansion between 0.5 and 1.0 percent this year.

The vital export-oriented manufacturing sector, including the massive car industry, has suffered from uncertainty over global trade conflicts, the threat of a no-deal Brexit and weakness in emerging markets.

Strength in services firms and resilient domestic demand have so far kept the economy afloat as the mood clouded over at producer companies.

"The outlook for the German economy has become grimmer," although "there is no reason to panic," ING economist Carsten Brzeski said.

"Today's labour market data indicate that in the months ahead, private consumption will no longer be the powerful growth driver it used to be in recent years."

Economist Martin Mueller of KfW public investment bank agreed that "if the recession in industry intensifies and spreads to industry-related services, this will lead to more layoffs."

"However, a serious increase in the number of unemployed persons is hardly to be expected, even if the downturn should intensify," he added.

The German economy has adapted in recent years to preserve more jobs through downturns, Mueller said.

At the eurozone level, the European Central Bank is pondering plunging interest rates further into negative territory and relaunching its "quantitative easing" (QE) mass bond-buying scheme to reinvigorate the 19-nation single currency bloc.

Copyright AFP (Agence France-Press), 2019