SYDENY: Australian unemployment rose last month as growing confidence saw job-seekers return to the market, but the government warned of a further rise as stimulus money wore off.

The only advanced economy to avoid recession in the global downturn, Australia has seen its jobless figure hold steady since May helped by multi-billion dollar government pump-priming measures.

Data from the Australian Bureau of Statistics (ABS) showed the country’s unemployment rate edged up to 5.8 per cent from 5.7 per cent in October.

It said 24,500 extra jobs were created, although that was outstripped by a surprise jump of 35,000 in the number of people looking for work.

The modest rise back to August jobless levels reflected a fairly consistent picture of employment since May, said AMP Capital Investors chief economist Shane Oliver.

He said the labour force surge of 35,000 was an “unusually high number” and would be vital as resource-rich Australia gears for a mining boom.

Most of the new jobs made in October were part-time positions, which grew by 21,500, while full-time jobs rose by 2,900, the ABS said.

Despite the upbeat news, Treasurer Wayne Swan warned that unemployment, a lagging indicator of economic growth, would climb as the effects of the global crisis unwound.

Canberra this month sharply upgraded its growth and jobs forecasts, tipping unemployment to peak at 6.75 percent in mid-2010, instead of the 8.5 percent flagged in the May budget.

But economists said strong growth in jobs -- 75,100 since June -- showed unemployment may already have peaked.

Australia was the only major Western nation to avoid a recession and last week raised interest rates for a second successive month to 3.5 per cent.