German unemployment hit a post-war high in March after cold weather deterred many firms from hiring workers.
Unemployment is casting a long shadow over German voters
The number of people out of work increased by 92,000 to 4.97 million, according to seasonally adjusted figures from the Federal Labour Office.
That pushed Germany's jobless rate to 12%, compared with about 5% in the UK and the US.
The non-seasonally adjusted figure stayed above the 5 million level, falling by 41,000 to 5.176 million.
Job creation has become a key political issue as Chancellor Gerhard Schroeder prepares to fight state elections.
One of Mr Schroeder's promises that got him into office was his vow to tackle unemployment.
That has proved tricky and his popularity among voters has suffered as a result, especially with firms such as Volkswagen, Siemens and DaimlerChrysler embarking on far reaching cost-cutting programmes.
Analysts said that the current lack of job security is hampering consumer spending and holding back economic growth.
Despite the apparent bleakness of the picture, Economy minister Wolfgang Clement predicted that unemployment had peaked.
He expects the headline rate to have dipped below 5 million by this spring.
His views were backed up by the deputy head of the labour office Heinrich Alt, who said that the number of unemployed should fall by about 170,000 in April.
Mr Alt warned, however, that economic growth was not strong enough to turn the tide of unemployment and was likely to only stabilize the labour market.
"From an economic point of view we cannot expect a turnaround in the hard-pressed labour market," said Brian Mandt, an economist at Postbank.