July 6 (Bloomberg) -- German unemployment probably rose for a sixth month in June as an export-driven recovery in Europe's largest economy was insufficient to promote hiring, a survey of economists showed.

The number of job seekers in Germany may have risen a seasonally adjusted 10,000 from May, according to the median forecast of 36 economists surveyed by Bloomberg News. The adjusted jobless rate probably was unchanged at 9.8 percent, the second highest among the dozen euro nations.

``Growth is still very weak,'' said Stefan Muetze, an economist at Helaba Invest GmbH in Frankfurt, whose forecast matched the median. ``The spillover into domestic demand hasn't taken place.''

The German economy grew 0.4 percent in the first quarter, less than the 0.6 percent for the whole euro region and the 1 percent achieved in the U.S. Consumer spending, which accounts for more than half of the economy, has yet to revive, leaving exports as the sole pillar of German growth. Retail sales in May fell the most since November, a government report showed last week.

The Federal Labor Agency is scheduled to publish the labor market report at 9:55 a.m. in Nuremberg. The number of registered jobseekers fell an adjusted 1,000 from May, Reuters reported, citing unidentified people who have seen the agency's figures.

Retail Job Cuts

Companies dependent on domestic business are firing workers to boost profitability. KarstadtQuelle AG, Germany's biggest department-store operator, said it will shed 4,000 jobs by 2006. The cuts, almost a 10th of its workforce, come as the company faces a third year of dwindling sales.

Orders from regions such as the U.S. and Asia are boosting German exports. Plant and machinery orders rose 23 percent in May from a year ago, driven by a jump in export orders, the VDMA plant and machinery industry association said a week ago. Orders from abroad increased 34 percent, domestic orders just 4 percent.

The IWH economic institute, based in Halle in eastern Germany, last week raised its forecast for German economic growth this year to 1.8 percent after the first contraction in decade in 2003, the third of the six leading state-funded institutes to predict higher growth last month. The DIW institute will today also raise its growth forecast for this year and next because of stronger-than-expected exports, Berliner Zeitung said.

`Too Weak'

That may not be enough to get companies to start hiring again. ``Growth is too weak to prevent unemployment from rising further,'' said Joerg Kraemer, an economist at Invesco Asset Management in Frankfurt.

By contrast, the U.S. economy added 1.3 million jobs so far this year, the biggest six-month gain in four years. The unemployment rate stayed at 5.6 percent in June, the Labor Department said Friday.

German consumers haven't increased spending for more than a year. Luxury carmakers Bayerische Motoren Werke AG, Porsche AG and DaimlerChrysler AG boosted U.S. sales in June while German new car registrations fell 7.3 percent in May from a year ago.

German retailers lowered prices in June and expect further reductions in coming months to reduce rising inventories, the Ifo research institute said last week in a breakdown of its business confidence report. Ifo's index fell to a nine-month low in June.

``Domestic demand is weak and that won't change significantly this year,'' Wolfgang Wiegard, chairman of Chancellor Gerhard Schroeder's council of economic advisers, said last week.

Schroeder's Programs

Schroeder is counting on a reduction of non-wage labor costs as well as the easing of regulations on dismissing staff and a tightening of entitlements to jobless benefits to help reduce unemployment and spur consumer spending.

The government also introduced subsidized self-employment and brought in a program under which privately run agencies take on unemployed people to hire them out as temporary staff. While this cuts the number of registered job seekers, those taken on by the agencies are not necessarily working.

Economics and Labor Minister Wolfgang Clement expects the number of jobseekers to decline in the course of this year as economic growth accelerates. Still, average unemployment this year will probably be higher than last year amid companies' hesitation to hire, according to his deputy Gerd Andres.

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net

Last Updated: July 6, 2004 02:46 EDT