German unemployment dropped sharply this month as spring brought another sign of recovery in Europe's top economy, but undoing a short-work scheme might limit the need for many more new workers.

Unemployment dropped to 8.1 per cent of the workforce from 8.5 per cent in March, according to unadjusted figures released yesterday by the Federal Labour Agency that serve as a basis for public debate.

"There was an unexpectedly strong springtime upturn on the labour market in April. The current trend is encouraging," said the agency's head, Frank-Juergen Weise.

Improvements were seen in the tourism and construction sectors, which were hit by particularly cold and snowy winter weather through March, while an earlier end to the Easter holiday also probably contributed to the result.

The seasonally-adjusted rate favoured by analysts fell for the fifth straight month and posted its sharpest drop since early 2008 to 7.8 per cent, the lowest level since December 2008, Capital Economics senior European economist Jennifer McKeown noted.

Analysts polled by Dow Jones Newswires had forecast an adjusted rate of eight per cent.

The drop "highlights the current contrast between the German economic climate and the periphery's troubles", McKeown said in reference to troubled eurozone countries like Greece, Portugal and Spain.

ING senior economist Carsten Brzeski put the improvement down to active labour market policies, including a government-subsidised short-work programme that lets companies cut workers' hours, a scheme to be extended to March 2012.

Trouble spots nonetheless remained in formerly communist areas of eastern Germany, and the highest unemployment, at 14.2 per cent, was recorded in Berlin.

Around 3.4 million people were looking for work in all, or 162,000 fewer than in the previous month, the labour agency said.

The figures came two days after the GfK research group said that German consumer confidence had risen more than expected.