BERLIN - GERMANY'S jobless rate dipped in November to 7.1 per cent as the number of people out of work hit a new 16-year low, but the national labour agency warned on Thursday of increasing signs that the economic crisis will soon hit the job market in Europe's biggest economy.

The unadjusted unemployment rate declined from 7.2 per cent in October, the Federal Labor Agency said. It said a total of 2.988 million people were registered as jobless - 8,000 fewer than a month earlier and the lowest level since November, 1992.

However, Germany fell into recession in the third quarter and economists expect a reversal soon to the three-year downward drift of unemployment.

'The labour market is still stable,' labour agency head Frank-Juergen Weise said in a statement. But 'there are increasing signs that the economic downswing will soon take hold of the labour market.' His agency noted that it generally takes a few months for economic developments to translate into changes in unemployment.

Auto manufacturers and others already have announced production stoppages as demand declines.

The seasonally adjusted jobless rate was unchanged at 7.5 per cent in November, although the number of people out of work dipped by a modest 10,000 in adjusted terms.

Economist Timo Klein with IHS Global Insight in Frankfurt said he 'expects seasonally adjusted unemployment to either stagnate or already head higher in December'. The government's independent panel of economic advisers recently forecast that the number of Germans registered as unemployed would increase to an average of 3.3 million in 2009 from 3.27 million this year.

The government is forecasting economic growth of 0.2 per cent next year, although many economists now expect negative growth.

Chancellor Angela Merkel acknowledged on Wednesday that '2009 will be a year of bad news'. German unemployment has been sinking since it peaked at 12.6 per cent in February 2005 - with a post-reunification record of 5.216 million people jobless.

Exports have been a key driver of the country's improved performance in recent years - although weakening exports were a major factor in the economic contraction that pushed Germany into recession in the third quarter. -- AP