German unemployment surged by 60,000 in May, its sharpest rise for five years.

The Federal Labour Office said the adjusted jobless total, which takes into account the effects of weather and seasonal hiring, rose to 4.042 million.

The unadjusted figure fell to 3.946 million, giving an unadjusted rate of 9.5%, compared with 9.7% in April.

Labour Office President Florian Gerster said a wage dispute in the construction sector had contributed to May's sharp rise, and that he saw no improvement in the jobs market until the fourth quarter.

This is bad news for Social Democrat Chancellor Gerhard Schroeder, who was hoping for a turnaround before tough general elections just four months away.

Jobs battlefield

Mr Schroeder, who came to power in 1998 pledging to take firm control of unemployment, has again made the issue the centre-piece of his electoral campaign.

The chancellor was boosted by a much stronger than expected rise in industrial orders in April, which he said was a sign of the economic upturn in Europe's biggest economy.

Nonetheless, it looks unlikely he will make good on the 1998 pledge to bring unemployment below the 3.5 million mark.

His challenger for the chancellery, conservative candidate Edmund Stoiber, has mercilessly hammered this point home.

Mr Stoiber can point to his own successes as prime minister in the southern state of Bavaria, which enjoyed a mini-boom at a time when the rest of Germany was suffering recession.

All major surveys carried out in the past month have put Mr Stoiber's conservative CDU/CSU alliance at least five percentage points ahead of Mr Schroeder's SPD - although the chancellor is still personally more popular than the Bavarian leader.