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WORLD BUSINESS

German jobless rate falls again

From CNN Correspondent Chris Burns

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Fewer people appear to be seeking work in Germany.

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BERLIN, Germany (CNN) -- Germany's seasonally adjusted unemployment rate fell for a fourth straight month in July, by one-tenth of a percent to 11.6 percent -- a decrease due in part to a shrinking number of Germans seeking work, the Labor Office said.

Unemployment will be the key issue in expected early elections in September, in which polls indicate conservatives led by Angela Merkel are likely to defeat Chancellor Gerhard Schroeder's Social Democrats.

The actual number of jobless rose by 68,000 to 4,772,000, raising the unadjusted rate from 11.3 percent to 11.5 percent, the office said.

But factoring in seasonal adjustments, including former jobseekers on summer vacations and a summer break in job training programs, the number of unemployed dropped by 42,000, the office said.

The country's jobless rate earlier this year hit 12 percent and topped 5 million -- the highest since the 1930's depression -- and was the key reason Schroeder's Social Democrats lost the country's biggest state election in May.

That defeat prompted Schroeder to push for elections a year early, engineering a no-confidence vote earlier this month that prompted President Horst Koehler to set elections for September 18. The move is being challenged in the country's high court.

Schroeder contends that after a string of state election defeats, the conservatives now firmly control the Bundesrat, or upper house of parliament, and can block much of his legislation. He is seeking a new mandate to push through more reforms.

Schroeder's SPD is polling about 15 points behind the conservatives, but the chancellor hopes to close the gap by arguing that the conservatives want more-painful reforms.

Schroeder's reforms, which cut welfare benefits and cost him support among leftists, was blamed for the jump in unemployment earlier this year. In the longer run, however, the reforms are aimed at forcing the hard-core unemployed to seek work.

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