Germany's unemployment rate has risen to 10.8 per cent with 4.46 million people out of work, the highest level in seven years.

The seventh consecutive monthly rise in December pushed Germany's average unemployment rate in 2004 up to 10.5 per cent, the highest level since German unification in 1990.

There were 150,000 more people out of work in December than at the same time last year, with the seasonally adjusted jobless figure, not as closely watched in Germany, rising by 17,000.

Germany's federal employment office blamed the higher-than-anticipated rise on seasonal factors such as construction companies laying off workers in winter, and on weak economic growth.

"The three years of stagnation in the German economy came to an end in 2004. But the upswing is still not strong enough," said Mr Frank-Jürgen Weise of the federal employment office in Nuremburg.

Germany's labour minister, Mr Wolfgang Clement, admitted there was no turnaround yet on the employment market.

"But we have a trend reversal in the number of employed," he said, pointing to a 0.3 per cent rise in the number of working Germans to 39.44 million.

This is the first rise in years, mainly due to the government's introduction of part-time and self-employment programmes and so-called "one-euro-jobs" created by local authorities.

The government is bracing itself for a spike in unemployment figures as economic and social welfare reforms kick in. Some 27,000 social welfare recipients were included for the first time in the December figures.