The number of Germans out of a job edged up in April, in a sign that a gradual pick-up in the overall economy is taking time to filter through to the jobs market.

The number of unemployed in the eurozone's largest economy rose by 6,000 on a seasonally adjusted basis to 3.974m. "The fact the labour market is not yet benefiting from the economic recovery is clear from the seasonally adjusted data," said Florian Gerster, the Labour Office's new chief.

The figures undermine any hopes the government of chancellor Gerhard Schröder may have that the jobless situation will improve enough to boost the governing parties in the forthcoming general election. An unexpected fall of 8,000 in unemployment in March had cheered the ruling Social Democrats, who are trailing the opposition conservatives in opinion polls. This however was a blip caused largely by special factors such as mild weather.

The September elections will continue to be dominated by the unemployment situation and the state of the economy, but nascent recovery as yet remains fragile. This was shown by a surprise fall in the keenly-watched Ifo business climate index last month. Figures on Tuesday in addition showed that manufacturing orders unexpectedly fell 0.1 per cent in March.

Economists expect further slight increases in the unemployment rate in coming months, with no improvement on the labour market expected before the third quarter - likely to be too late to aid the government's campaign ahead of polling day on September 22.

Unadjusted for seasonal factors, the April unemployment figure fell by 132,000 to 4.024m, or 9.7 per cent, the Labour Office said.

"We expect payrolls to contract well into the spring as the recovery remains sluggish and companies are reluctant to hire in the face of the conflicts about pay in many sectors of the economy," commented Morgan Stanley.

The latest jobless figures come as a pay strike in the engineering sector entered a second day. On Monday 50,000 carworkers in south-western Germany began strikes in support of demands for a 4 per cent pay increase. The strikes, organised by the IG Metall engineering union, are the most serious industrial action in Germany since 1995.

The engineering industry employers' association warned the strike would undermine Germany's industry-wide wage bargaining system, and that an expensive settlement would force many companies to leave the employers' associations that bind companies into the sectoral agreement.

Officials from both sides hinted that the pay dispute was likely to be resolved eventually through an independent arbitrator. Economists say a settlement of below 4 per cent would be economically bearable.

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