Economic activity slowed almost to a halt in the second quarter of the year, and officials in Berlin have been counting on household spending to pick up some of the slack from exports, Germany's traditional growth engine.
The Federal Labour Office said the seasonally-adjusted number of people seeking work had decreased by 8,000 this month, whereas economists polled by Dow Jones Newswires had expected a slightly bigger decline of 10,000.
"Despite weaker growth of the German economy, the labour market situation improved again," the office commented in a statement.
ING senior economist Carsten Brzeski noted that "the German labour market remains strong but it would be naīve to think that the labour market could be totally immune against the debt crisis and the economic slowdown.
"With employment at historical highs, favourable demographics and an economy that is slowing but not contracting, the labour market should remain growth-supportive" however, he added.
Meanwhile seasonally-adjusted retail sales were unchanged in July from the previous month, the national statistics office said, after leaping in June by a revised 4.5 percent.
Analysts had forecast a seasonally-adjusted drop of 2.0 percent on the month, but economists note the indicator is volatile and subject to frequent revisions.
Last week, a survey by the GfK research institute found that German consumer sentiment had been hit by the transatlantic debt crisis and fears of a new recession, falling to its lowest level since late last year.
But Commerzbank analyst Ulrike Rondorf found reason for cheer in the unchanged sales data, given the strong uptick in June.
"It means that sales in July are well above the average for the second quarter," she said.
While expecting weaker second-half growth, Rondof added that "as long as the sovereign debt crisis does not escalate and an uncertainty shock occurs - and there are no signs of this happening yet - the upswing should continue."
German officials expect economic activity to expand by around 3.0 percent this year.