Berlin - The decline in German unemployment slowed this month, data to be released Thursday is forecast to show, as employers curbed hiring in the face of growing economic uncertainty.

The numbers of out of work in Europe's biggest economy fell by 20,000 in July analysts say Germany's Labour Office will report with the jobless rate remaining at 7.8 per cent.

The expected drop in July German unemployment comes after the numbers out of work fell by 38,000 to a 16-year-low in June of 3.27 million.

But since then, a steady steam of data and economic sentiment surveys have pointed to the nation's economy losing steam amid fears that inflation has been picking up on the back of high food and energy costs.

German business confidence dropped to near a three-year low in July, a key survey drawn up by the Ifo Institute for Economic Research released this month said .

"These results suggest the economic upswing is coming to an end," said Ifo chief Hans-Werner Sinn releasing the latest report.

While German exports recorded their biggest fall in about four years in May, factory orders fell for the sixth consecutive month in May and industrial production also dropped sharply.

This points to economic growth sliding during the second quarter after a strong start to the year.

The most pessimistic forecasts are for German economic growth to slow to 0.7 per cent during the three months to the end of June. (dpa)