* Jan unemployment rate soars to 10-year high
* Rise mainly due to one-off factors
* Dec money supply growth hits 13-month high
* Interest rate outlook unchanged after data
(Adds finance ministry comment in paras 14)
By Cheon Jong-woo and Yoo Choonsik
SEOUL, Feb 10 (Reuters) - South Korea's unemployment rate
jumped to a 10-year high in January, providing further evidence
the economic recovery may be losing steam.
Analysts said the data sealed the case for the central bank
to keep rates on hold at Thursday's review, but did little to
alter the policy outlook because the jump in the jobless rate
was mainly due to one-off factors.
"The unusually cold weather and heavy snowfalls must have
distorted the overall jobs market data in January, but still, a
poor reading is not good for the economy," said Goh You-sun, an
economist at Daewoo Securities.
"It makes the expected freeze in interest rates tomorrow
more likely, although future interest rate policy will depend
on future economic indicators," she added.
The Bank of Korea is expected to hold rates steady at
record-low 2.0 percent on Thursday and reaffirm its intention
to raise rates any time, saying keeping rates at an ultra-low
level for an extended period can stoke inflationary pressures,
according to a Reuters poll.
Analysts also predict a rate raise during the first half of
the year.
Data also showed on Wednesday growth in money supply rose
at its fastest pace in over a year in December, in a another
sign of a pick up in price pressures after producer price
inflation hit a 10-month high last month.
But the government has publicly opposed an early tightening
and revived its right after a decade to sit in monetary policy
meetings and press its case and prompting investors to push
their bets on a rate hike deeper into 2010.
Analyst say the performance of the export sector, which
could come under pressure from a policy tightening in its
biggest market, China, will be closely followed for direction
on policy rates.
MARKETS LARGELY UNMOVED
Seoul financial markets generally ignored both sets of
data, although the front-month contract on three-year treasury
bond futures slightly cut losses after the job figures.
The unemployment rate in January soared to a seasonally
adjusted 4.8 percent, the highest since February 2000, from a
revised 3.6 percent in both December and November, the
statistics agency data showed.
The agency attributed the rise to a drop in farming and
construction jobs due to the cold weather and a rush of
applications for a one-off government job programme.
About 250,000 people submitted their applications for the
job programme in January. The number of employed or seeking
jobs total about 25 million.
A lot of the job seekers are expected to be absorbed by a
new jobs programme which will come into effect later this month
and the market is expected to improve, finance ministry
officials said. The programme was originally planned to start
in March.
Central bank data showed earlier the broadest L money
supply measure rose a provisional 11.4 percent in December from
a year earlier, the fastest annual pace since November 2008 and
compared to a revised 10.4 percent rise in the previous month.
The L money measure includes cash, all types of deposits at
financial institutions and all money market instruments issued.
The central bank does not focus its policy on controlling
money supply but the data, combined with signs of inflation
pressures already building, could point to growing pressure on
the Bank of Korea to raise interest rates.
"Money supply has been abundant throughout the crisis
period and today's data just reconfirms that, although this
data alone will not move the Bank of Korea," said Park
Sang-hyun, chief economist at HI Investment & Securities.
(Additional reporting by Seo Eun-kyung; Editing by Kazunori
Takada)
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