Economists fear the dole queues will lengthen again come winter

Adjusted for seasonal factors such as July's surge in school leavers joining the job market and rising agricultural hiring, 4.41 million people were out of work across Germany in August, unchanged from July.

The raw figure showed a fall from 4.35 million to 4.31 million, giving an overall jobless rate of 10.4% of the working-age population.

Economists had expected a rise in the adjusted figure, but even officials are still afraid of more rises to come despite signs the economy may be picking up.

"We don't see any improvement in the German labour market before the second quarter of next year," said Florian Gerster, head of the Federal Labour Office.

And Michael Rogowski, head of Germany's BDI industry federation said he expected the jobless total to top 5 million this winter - although he said mild weather could keep the number below that point.

Still, there was some good news for hard-pressed Eastern Germany, since both adjusted and unadjusted figures showed a solid fall in joblessness - unlike the richer West.

Reform

Most agree that the so-called Hartz labour market measures, named after one of Chancellor Gerhard Schroeder's advisers, are having an effect.

The reforms are designed to push people off welfare and into work, in the face of the possibility of losing benefits.

"This effect could continue for a while, certainly, but it's still a one-off," said Andreas Rees of Hypovereinsbank.

But although the government is planning tax cuts as a way to kick-start the economy, some fear the effect could be minimal, since their 15.5bn euro cost may be covered by cuts in transport and homebuying subsidies.

"Unemployment will peak at precisely the point when tax cuts should have a positive effect on consumption," Mr Rees said.

"Unemployment will overshadow everything. We won't see a turnaround next year either."