BERLIN, July 31 Reuters The number of people out of work in Germany rose more than expected in July in the latest sign of the challenges facing Europe39;s largest economy, Federal Labour Office figures showed on Wednesday.

The office said the number of unemployed grew by 18,000 in seasonally adjusted terms to 2.8 million. Analysts polled by Reuters had expected that figure to rise by 15,000.

The seasonally adjusted job rate remained stable at 6.0.

The weak economic development is weighing on the labour market, said the labour office39;s Daniel Terzenbach.

At the beginning of the summer break, unemployment and underemployment rose more sharply than usual.

Germany39;s economy, the worst performing major economy last year, has struggled to recover after high energy costs, feeble global orders and record high interest rates took their toll.

The situation remains gloomy as the economy unexpectedly contracted in the second quarter after skirting a recession at the start of the year, the statistics office said on Tuesday.

The strong labour market has been an important driver of the economy39;s resilience over the last few years, said ING economist Carsten Brzeski. That, however, was not enough to prevent the weakening of private consumption this and last year, he said.

Looking ahead, the ongoing increase in the number of insolvencies combined with fading recruitment plans both in manufacturing and services does not bode well for labour market developments in the…