Only a few weeks ago, the tenure of Gerhard Schroeder, the first German chancellor born after World War II, seemed doomed. Barely a year in office, he had alienated his left-wing Social Democrats with a series of electoral setbacks and antagonized the public with economic austerity measures.

But in a remarkable shift in destiny, Schroeder was confirmed today as leader of the Social Democratic Party by 86 percent of the delegates at a party congress in a resounding vote of confidence. He also received a boost from economic news showing a surge in export orders and a sudden drop in unemployment.

Like his policies, Schroeder's fortunes tend to fluctuate, and his latest success may prove ephemeral. Yet as he basked in the applause of 500 delegates, Schroeder demonstrated that his tactical skills and his ability to capitalize on lucky breaks have endowed him with a resiliency that his political enemies are learning to respect.

In an impassioned speech, Schroeder stuck to his standard formula of occupying the middle ground of the German political spectrum. "We will not let up in fighting for this 'New Middle,' " Schroeder declared. "We cannot let anyone, left or right, fall by the wayside."

The approach that some analysts have characterized as Schroeder's "New Muddle" was reflected in his renewed defense of government intervention, as demonstrated by his rescue of the construction company Philipp Holzmann AG last month when it appeared that tens of thousands of jobs would be jeopardized. That timely salvation did wonders to restore Schroeder's reputation as a friend of the working class.

But he did not shrink from his standard refrain, insisting that Germany could no longer live beyond its means and needs to streamline its bloated welfare state. He defended his $16 billion in budget cuts, saying that "comfortable ways, such as further deficit spending, are no longer available to us."

Schroeder reaffirmed pledges to cut corporate taxes, curtail state debts and revamp social benefits to encourage greater personal initiative. "We will get justice when we have growth and dynamism," he observed, giving a new twist to a traditional demand among Social Democrats to reduce income disparities. And while noting that he has bowed to many party members' wishes for heavier taxes on the rich, the chancellor observed that such steps could offer no guarantee for better living standards among low-income people.

After weeks of tacking toward the left in advance of the party congress, Schroeder refused today to disavow the pro-business attitudes that made him an avid supporter of the "Third Way" approach spearheaded by British Prime Minister Tony Blair.

Schroeder said that despite vastly different party traditions, Germany could learn much from the transformation of Britain's Labor Party in the way it defined fairness and equality in a modern Western democracy. "We're not about equal earnings," Schroeder told his skeptical audience. "We're about real equality--and that means equal chances for fulfillment, equal access to knowledge, equal opportunities to prosper."

The comfortable majority that Schroeder secured in affirming his position as party chairman seems likely to forestall any further challenges to his leadership before state elections next year.

With Oskar Lafontaine, the former party leader and darling of the left now shoved to the sideline in premature retirement, and Defense Minister Rudolf Scharping pushed into a corner by his difficult task of modernizing the German military, Schroeder seems insulated from any attacks by his rivals for the first time since he took office.

But he also seems to sense that unless he succeeds in his tricky balancing act of promising radical change without intolerable pain, his leadership will again fall under a cloud. "The mood is getting better, but it is still vulnerable," Schroeder acknowledged in a television interview. "Unless we get our act together, the optimism we are feeling at this moment will not last."

CAPTION: German Chancellor Gerhard Schroeder celebrates his confirmation as leader of Social Democrats at the party's convention in Berlin.