Seasonally adjusted figures showed the number of unemployed people had dropped by a dramatic 91,000 this month, with the unemployment rate falling from 5.9 percent in June.
“The situation in the jobs market is continuing to improve. Despite the beginning of the summer holidays, there has been another significant decrease in joblessness and underemployment,” said Detlef Scheele, head of the BA federal labour agency.
“The employment figures continue to grow, and businesses are now looking for more employees,” he added, pointing to the 744,000 new jobs which were registered this month, 171,000 more than in July 2020.
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Before the pandemic struck last year and brought entire sectors of the economy to a standstill, Germany’s unemployment rate had hovered at record lows of around five percent.
The country relied heavily on subsidised short-time work schemes (Kurzarbeit) to weather the economic storm, with nearly six million Germans placed on reduced hours at the peak of the health crisis last April.
The scheme was still supporting 2.23 million people according to the latest available figures in May, the agency said.
In raw figures, the number of people in unemployment is now at just below 2.6 million.
Restaurants, shops and cultural venues have been open in Europe’s largest economy since restrictions were eased in May, although case numbers have begun to rise again in recent weeks, fuelling fears of a fourth wave.
As the more contagious Delta variant pushes up infection rates, Germany’s vaccination rate has also slowed after a surge in the spring.
With just over half the population now fully vaccinated, the country is still some way off the 80 percent targeted for herd immunity.
On Thursday 3,142 cases were reported within 24 hours in Germany, and 21 deaths. The incidence rate rose to 16 cases per 100,000 residents within seven days – up from around 5 earlier in July.