Berlin  - German unemployment rose this month, data to be released Wednesday is forecast to show, despite signs that a recovery in Europe's biggest economy is gaining ground.

Analysts' projections that the numbers out of work in seasonally adjusted terms jumped by 20,000 in September raise the prospects of talks on forging a new German Government will be held against the backdrop of growing jobless queues in the country.

A predicted increase in September would push the nation's jobless rate up from 8.3 per cent in August to 8.4 per cent this month.

The expected increase in September followed a surprise 1,000-fall in seasonally adjusted joblessness in August.

Until now, government-subsidized short-term work contracts have helped German employers avoid large-scale layoffs as a result of what has been the nation's steepest economic slowdown in a generation.

However, an increase in September could be an indication that the economic slowdown is starting to catch up with the German labour market.

The release of the new unemployment data also comes as Chancellor Angela Merkel's conservative bloc prepares for talks with the pro-business Free Democrats on forming a new coalition government after the two parties secured a majority in Sunday's election. (dpa)