German unemployment fell by 2,000 in seasonally adjusted terms in August but the Germany’s federal labour office played down the fall and said weak growth was continuing to hurt the jobs market.
The first decline in the seasonally-adjusted number since December took the jobless total to 3.859 million and bucked analysts' expectations for a 17,400 rise.
But federal labour office president Mr Bernhard Jagoda said the fall was influenced by special factors and gave a downbeat assessment of the jobs market.
"The economic downturn is still noticeable in the jobs market. The east German labour market is hardly growing and the downturn is evident in west Germany," Mr Jagoda told a news conference.
He said a decline of 7,000 in the seasonally-adjusted east German figure which offset a rise of 5,000 in west Germany was largely due to the impact of summer holidays.
Some economists said the figures suggested the downturn in Europe's largest economy may be bottoming out.
But many said it was too soon to read much into the data as recent mass lay-offs announced by some top German companies have yet to show up in the figures.
Germany's export oriented manufacturers have been hit hard by the global slowdown. Siemens has plans to cut 10,000 jobs, chemicals groups BASF and Bayer each plan cuts of 4,000, the post office and rail network are laying off 7,500 and 6,000 respectively.
Mr Christoph Hausen, an economist at Commerzbank, said the German government might well boost government job creation in the east to embellish the statistics ahead of the September 2002 election.
"In the coming months we should pay close attention to government programmes, as elections approach it is going to play an increasing role" he said.
"At the last election these measures had been used extensively and I expect this to happen again now. A drop in east German unemployment cannot be explained by the overall economic development," he added.