Germany's economy has been hit by falling demand for its exports

German unemployment rose in June, official figures have shown, but the increase was smaller than expected.

The number of people out of work reached 3.495 million on a seasonally adjusted basis, a rise of 31,000 on May's number, official figures showed.

Analysts had forecast a bigger rise of about 45,000. The jobless rate rose to 8.3% from 8.2% in May, the Federal Labour Office said.

On an unadjusted basis, unemployment fell by 48,000 from the previous month.

"[We] expect seasonally adjusted unemployment to rise throughout 2009 and 2010, with monthly increments most likely to pick up during the second half of 2009," said Timo Klein from Global Insight.

"Employment has generally not fallen quite as fast as unemployment has been increasing, as firms aim to hold onto their existing workforce wherever possible."