(Recasts, adds economist quote, background)
By Holger Hansen and Brian Rohan
BERLIN, Sept 30 (Reuters) - German unemployment fell for a third consecutive month in September as statistical changes and government measures cushioned the labour market in Europe's largest economy.
The number of jobless fell by 12,000 in seasonally adjusted
terms this month, good for a rate of 8.2 percent, the Labour
Office said on Wednesday. Economists polled by Reuters had
expected a rise of 20,000
The Labour Office said, however, that without special effects, unemployment would have risen by 10,000 on a seasonally adjusted basis and cautioned that the figures did not point to a change in the overall trend of rising joblessness.
For a graphic showing German unemployment and consumer confidence, click here ( http://graphics.thomsonreuters.com/099/DE_UNEMP0909.jpg )
Economists expect joblessness to rise in the coming months and peak next year, but they have backed off from earlier doomsday scenarios that it could climb to above 5 million.
A government subsidy scheme, known as "Kurzarbeit", that encourages companies to reduce the hours of their workers instead of firing them has prevented mass layoffs during the deepest part of a sharp industrial downturn.
Now, production and exports are picking up, providing hope that the worst can be avoided, although there is a fear that with the German election out of the way, firms could be more aggressive in laying off staff.
"Although September's fall in German unemployment was flattered by yet more statistical changes, the labour market still appears to be holding up better than elsewhere," said Jennifer McKeown at Capital Economics.
"Unemployment was rising by around 60,000 per month earlier this year and it was clear even then that government incentives for firms to keep workers on shorter hours were preventing the sharp increases seen in other euro-zone economies," she added.
The lastest available data from Eurostat shows Germany's seasonally adjusted jobless rate stood at 7.7 percent in July, compared to 9.8 percent for France and 18.5 percent in Spain.
The number of workers participating in the short-term work scheme in Germany stood at 1.43 million at the end of June, a rise of 300,000 from March, a Labour Office official told Reuters this month.
NO JOB MARKET UPTURN AHEAD
The economy has shown signs of recovery after it pulled out of its worst postwar recession in the second quarter of this year, with forward looking indicators suggesting growth will continue in the following three-month period.
Consumers have shrugged off worries over joblessness, with their morale rising to its highest level in 16 months heading into October on growing confidence the economy has passed its low point, according to the GfK research group. [ID:nLO555423]
German business sentiment also rose in September, hitting its highest level in a year, while in July exports rose for a third straight month and manufacturing orders increased more than expected.
But some areas are faring better than others, with the battered industrial sector slimming down and struggling in particular to get back on its feet.
Industrial conglomerate Siemens
Economist Peter Meister at BHF said the economy has built up overcapacity that would soon have to be unwound.
"Even when the economy picks up we won't see an upturn in the job market. Unemployment will keep the new government busy in the next few years," he added. (Additional reporting by Joerg Voelkerling, editing by Mike Peacock and Toby Chopra)