Nov. 11 (Bloomberg) -- South Korea’s unemployment rate fell to the lowest level in nine months as transport and telecommunications companies and banks hired more workers, a further sign the nation’s economy is recovering.

The jobless rate declined to 3.4 percent in October from 3.6 percent in September, Statistics Korea said today in Gwacheon, citing seasonally adjusted figures.

Gross domestic product expanded at the fastest pace in seven years in the three months through September as companies including Samsung Electronics Co. and Hyundai Motor Co. reported surging profits. Finance Minister Yoon Jeung Hyun said last month the economy may expand this year, reversing an earlier prediction of a contraction.

Industrial production gained 5.4 percent in September and inflation remained below the central bank’s target of between 2.5 percent and 3.5 percent for a fifth month in October. Other reports showed manufacturers’ confidence stayed near a two-year high and consumer confidence has climbed to a seven-year peak.

Still, the nation’s employment market is unlikely to strengthen over the next one or two years, even as the economy recovers, President Lee Myung Bak said Oct. 15. The government should continue its key role in boosting the economy to help low-income earners, Lee said.

The number of people self-employed or working in the public service sector rose 5.6 percent, today’s report showed. People employed in the manufacturing industry dropped 2.2 percent in October from a year earlier and jobs at retail outlets, hotels and restaurants fell 3.1 percent.

The unadjusted jobless rate stood at 3.2 percent from 3.4 percent in September, today’s report showed.

South Korea’s central bank cut the benchmark interest rate by 3.25 percentage points between last October and February, the most aggressive easing since it began setting a policy rate a decade ago. The government also increased spending this year to help protect the economy from the global economic slump.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

Last Updated: November 10, 2009 23:45 EST