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German joblessness unexpectedly rises in September

BERLIN (Reuters) - German unemployment rose unexpectedly in September on a seasonally adjusted basis but remained close to its lowest level since reunification more than two decades ago.

The Labour Office said on Tuesday the increase - to the highest level since May 2011 - was not down to economic swings but because measures to integrate jobless people into the workforce had less effect in September.

"The seasonal increase in September is due to labour market policies providing less relief," said Heinrich Alt of the Labour Office, adding that the department was switching from short-term policies to longer-term ones intended to train the unemployed.

Data showed the number of people out of work rose by 25,000 to 2.975 million on a seasonally adjusted basis last month.

That compared with the consensus forecast in a Reuters poll for a drop of 5,000. The rise overshot even the highest estimate for an increase of 7,000.

Economists said there was no reason to be pessimistic about the so far strong labour market but added they would observe whether more people would be out of work in coming months.

"The increase is not yet dramatic. We will see in the coming months whether it is a cloud in a fair sky - unemployment is still especially low compared to Europe - or the first signs of rougher weather," said Mario Gruppe of Nord LB.

A solid jobs market combined with wage hikes and easing inflation helped Europe's largest economy withstand the early stages of the euro zone debt crisis and then return to growth after a dismal end to 2012 and start to 2013.

Solid domestic demand helped the German economy grow at its strongest rate in more than a year in the second quarter and raised expectations that German consumers may compensate for weak foreign demand and boost struggling euro zone peers.

The jobless rate crept up to 6.9 percent from 6.8 percent in August, its first increase since April. On a non-adjusted basis, it fell to 6.6 percent from 6.8 percent in August.

(Reporting by Annika Breidthardt; Editing by Madeline Chambers)

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