South Korea's jobless rate rose in January, but job creation accelerated sharply, indicating that more people came out to search for work amid signs that the economy is recovering, a government report showed Wednesday.

According to the report by Statistics Korea, the jobless rate stood at 3.5 percent last month, up from 3 percent in December. The seasonally adjusted jobless rate also inched up from 3.1 percent to 3.2 percent.

Job creation, however, quickened sharply. The number of employed people was 24.76 million in January, up 705,000 from a year earlier, the report showed.

The figure is much more than the 560,000 gain in December, the report showed. This marked the largest on-year job growth since March 2002 when 842,000 were added to the economy.

Experts said that the rise in the unemployment rate came mostly from the fact that more people went job hunting on expectations that labor market conditions are improving.

"There is a seasonal factor that young people, in particular, came out more aggressively to find jobs ahead of the graduation season, which resulted in raising the jobless rate," said Kang Hyun-gu, an analyst at Hyundai Securities.

"Still, the quickened job creation and the improving indicators such as industrial output suggest that people became more optimistic about the overall economic conditions. The rise in the jobless rate carries a positive aspect," he added.

Despite the overall improvement in labor market conditions, the government remained cautious, saying that it is somewhat early to say that the upward move will become a trend.

"January's brisk employment data stemmed not just from the growing signs that the economy is recovering but also from such seasonal one-off factors as a rise in demand in the run-up to the Lunar New Year holiday and the relatively favorable weather conditions," the ministry said.

"It is necessary to comprehensively take into consideration employment data for January and February before making a determination on the overall labor market conditions," it added.

The data comes as the economy is showing stronger signs of recovery from its protracted slump, with industrial output expanding at the fastest pace in 54 months in December.

South Korea's gross domestic product grew 0.9 percent in the fourth quarter of last year from three months earlier, slowing from a 1.1 percent gain in the third quarter.

From a year earlier, however, the economy grew 3.9 percent in the October-December period after gaining 3.3 percent on-year in the third quarter.

The wholesale and retail sector was the largest job creator, adding 126,000 jobs in January compared with a year earlier, the report showed.

The health and social welfare service sector and the lodging and dining sector also hired 122,000 and 119,000 more jobs, while manufacturers added 90,000 jobs over the same period.

The report showed that labor market conditions for younger people toughened as more students hunt for jobs ahead of graduation season.

The jobless rate for those aged 15-29 rose to 8.7 percent in January from December's 8.5 percent, according to the report. It is also higher than 7.5 percent recorded in the same month a year earlier. (Yonhap News)