Germany is struggling with unemployment of around 12%

When adjusted for seasonal swings, the jobless total fell 5,000 to 4.695 million, the 10th fall in 11 months.

However, the fall was less than the 20,000 expected by economists.

The unadjusted rate of unemployment, rose 36,000 to 5.05 million, or 12.2%, according to figures from the Federal Statistics Office.

Confidence

Reports published last week put business confidence at a 14-year high and showed consumers at their most confident for 11 months.

German consumers are feeling more confident

Their spending could help lift the economy this year, ending a five-year slump.

The European Central Bank has hinted that it is poised to raise interest rates soon, in order to keep a lid on the upward pressure this spending could put on inflation.

However, analysts said that the fact that the unadjusted, or headline, unemployment rate remained above the politically sensitive five million mark for the second consecutive month showed that Germany was still strugging with mass unemployment.

"We'd expect the seasonally adjusted total to decline in the coming months," said Citigroup economist Juergen Michels.

"But there is not likely to be any major turnaround because companies are still restructuring and the structural problems on the labour market are still there."