German unemployment rose more than anticipated as Europe’s biggest economy struggles to recover.

Joblessness increased by a seasonally adjusted 18,000 in July, while economists polled by Bloomberg had expected a gain of 15,000. The unemployment rate remained at 6%, the Federal Labor Agency said Wednesday.

“Weak economic developments are weighing on the labor market,” Daniel Terzenbach, who’s in charge of regions at the Federal Labor Agency, said in a statement. “At the start of the summer break, both unemployment and underemployment rose more than usual.”

Germany’s output suffered a surprise downturn in the second quarter, contracting 0.1% because of a drop in investment in equipment and buildings. At the same time, inflation has been sticky.

That data — published on Tuesday — came after purchasing manager indexes and Ifo’s closely watched business confidence gauge for July suggested Germany started the quarter on an even weaker footing. The economy is being held back by a continuing slump in the manufacturing base that previously sustained the country’s export-led growth strategy.

Still, the labor market has remained resilient even in times of stagnation, with companies holding on to workers amid widespread shortages of skilled staff. This, in turn, means firms will probably put their existing employees to work before hiring more, should economic activity start to pick up again at some point.

Germany comes second in ManpowerGroup’s global talent-shortage ranking, with 82% of employers reporting challenges in filling positions. Tackling the structural issue of a shrinking workforce is seen as crucial to return the economy to a sustainable growth path.

“The labor market outlook has been largely flat for a year now — economic stimulus would be important,” Enzo Weber of the German Institute for Employment Research said earlier this week. “Unemployment could rise a bit slower, but that’s not sufficient for a turn-around.”