After a statistical blip pushed the jobless total higher in September, the drop in seasonally adjusted unemployment resumed in October, dipping to 4.801 million, or a rate of 11.6 percent.
Economists polled by Reuters last week had forecast on average the jobless total would fall by 15,000 from September, with predictions ranging from a fall of 41,000 to a rise of 5,000.
They attributed the better-than-expected figures to a combination of factors, including the government's "Hartz IV" labour market measures which have increased the number of low-paying, part-time jobs but have yet to spark a noticeable rise in full-time work on normal terms.
"(The decline) is a reflection of the moderate economic recovery having a first impact on the jobs market. One can see that in the clear increase in the number of open jobs this year," said Alexander Koch of Hypovereinsbank.
"But to be fair, one also has to point out that the lion's share of that increase is due to state-supported measures such as one-euro jobs. In October, the fantastic weather likely also had a somewhat positive effect."
On an unadjusted basis, the jobless total fell by 94,000 to 4.556 million, the lowest total since last December for a rate of 11.0 percent.
But Heinrich Alt, deputy head of the Federal Labour Office, said he could not rule out a rise above the politically-sensitive 5 million mark during the winter.
The unadjusted jobless total rose to a post-war peak of 5.2 million in February, sparking a backlash against the government of Chancellor Gerhard Schroeder and contributing to his decision to call in May for early elections.
Following an inconclusive vote on September 18, Germany's two largest parties have entered talks to form a governing coalition.
They say creating jobs will be their top priority and have already mooted measures to help older workers. But they have limited flexibility given the poor state of Germany's finances.
Seasonally adjusted vacancies, seen by many economists as a more reliable indicator of the health of the labour market, rose by 27,000 in October, their 12th consecutive increase and strongest rise in seven months.
Experts believe October will mark the last fall in the headline, or unadjusted, figure before the usual winter rise.
Manufacturing employment improved for the first time in over a year in October, as increasing output and new orders encouraged firms to raise capacity, according to the RBS/BME survey of purchasing managers released on Tuesday.
German business confidence rose to a five-year high in October amid signs of a revival in domestic demand, and consumer sentiment was also set to improve in November due to a growing belief in economic revival, according to figures last week.