Jobless rise threatens German recovery

BERLIN, Germany -- Unemployment in Europe's largest economy rose last month as concerns grew over the pace of Germany's recovery and the impact of labour disruptions.

The Federal Labour Office said there were 6,000 more people out of work in April, bringing the seasonally adjusted total to 3.974 million. The adjusted jobless rate -- which takes into account factors like weather and season work -- remained unchanged at 8.1 percent.

The adjusted jobless number had been expected to rise by an average of 600 workers, according to a Reuters survey of analysts.

On an unadjusted basis, the ministry said the number of unemployed workers fell by 132,000 to 4.024 million, with the jobless rate down to 9.7 percent from 10 percent.

"The fact the labour market is not yet benefiting from the economic recovery is clear from the seasonally adjusted data,'' Labour Office chief Florian Gerster said in a statement.

The news came as a strike by Germany's biggest industrial union, IG Metall, entered a second day. Analysts believe the strike -- the first major labour action in seven years -- could threaten the country's fragile economic recovery.

IG Metall, which has 2.8 million members, is calling for a 6.5 percent wage increase. Employers have offered 3.3 percent.

"If IG Mettal gets strong pay increases -- higher than 4 percent -- jobless numbers may not decline as strongly as previously expected later in the year," Ulla Kochwasser, an analyst at Mizuho Corporate Bank, told Reuters.

"There will be some more slight increases until the second half [of the year], but much depends on the outcome of the current wage round."

The higher than expected jobless figures also come as a blow to Chancellor Gerhard Schroeder, who has been hoping for a strong recovery in the economy to boost his chances of re-election in the September general election.

In the previous election, Schroeder pledged to cut unemployment to 3.5 million -- a goal he has since abandoned.

And while the German economy has been showing signs of recovery, rising unemployment is seen as a threat to any rebound.

"There will be no improvement on the labour market before the third quarter, because the effect of the upswing is still lagged. That is too late for (an impact) on the federal elections,'' Juergen Pfister, an analyst at Commerzbank, told Reuters.