(RTTNews) - Bringing to an end long period of monthly declines in the number of jobless, Germany’s unemployment rose for the first time in almost three years in December as the economy fell in to a recession.

Data released by the Federal Labor Agency showed Wednesday that the number unemployed rose a seasonally adjusted 18,000 in December. The number exceeded the expected figure of 10,000. At the same time, the labor office downwardly revised November’s decrease in the number of jobless to 4,000 from 10,000 reported initially.

The seasonally adjusted jobless rate was 7.6% in December, a rate held unchanged since September 2008. The jobless rate for November was revised up to 7.6% from an initial estimate of 7.5%.

Commerzbank Economic Research analyst, Ralph Solveen said the rise in unemployed “Probably marks the beginning of a significant rise, which will noticeably curb private consumption.”

The biggest Eurozone economy entered into a recession for the first time in five years by contracting 0.5% in the third quarter, following a decline of 0.4% in the second quarter.

Solveen noted that the seasonally adjusted numbers of unemployed will rise at an increasing pace in the months ahead, although the sharpest rise is not likely to be until the second half of the year.

To shore up the economy, Chancellor Angela Merkel’s ruling coalition was mulling a second stimulus plan of about EUR 50 billion to be spent over the next two years.

Earlier in the day, the Federal Statistical Office said in a report that the ILO jobless rate stood at a seasonally adjusted 7.1% in November, compared with 8% recorded in the previous year. In October, the rate was 7.1%. The November rate was in line with economists’ expectations. The statistical office said the number of unemployed amounted to 3.08 million. On an annual basis, the unemployment dropped 10.6% or 360, 000 persons.

In order to find a balance between contracting economy and rising unemployment, the European Central Bank is expected to cut its key interest rate further when the Governing Council meets on January 15. Since October 2008, the ECB has reduced its benchmark interest rates by a cumulative 175 basis points to 2.5%. Economists forecast another cut of at least 50 basis points in its upcoming meeting.

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