Swiss unemployment at highest in over 4 years

* Seasonally adj. unemployment rate stable at 4.1 pct * Unadjusted rate hits highest level since Feb 2005

ZURICH, Nov 6 (Reuters) - Unemployment in Switzerland rose to 4.0 percent in October from 3.9 percent in September, hitting the highest level since February 2005 although economists said deterioration in the job market seems to be slowing. On a seasonally-adjusted basis, unemployment was stable at 4.1 percent, remaining at the highest level this decade, the State Secretariat for Economic Affairs (SECO) said on Friday.

"As we expected the labour market is a lagging indicator and jobs continue to be lost, although the seasonally adjusted rate has remained relatively constant, so it seems unemployment is not rising as fast as could be expected," said Bank Sarasin economist Jan Poser.

"We have to see if gross domestic product growth numbers are going to be as strong as leading indicators suggest and support the labour market next year," Poser said.

There were, however, some signs of continuing underlying weakness in the job market, with the number of jobseekers up 44 percent year on year and the extension of a programme of shorter working hours aimed at limiting job cuts.

The SECO said that in August, the last month for which data are available, almost 47,000 people had seen their working hours reduced, up almost 6,000 on the previous month.

"What is a bit disappointing, is that short-time work seems to be up which means overall production hours should be down," said UBS economist Reto Huenerwadel.

Many experts say unemployment could continue to rise into 2010 despite indications from improving macroeconomic data that Switzerland is now moving out of its deepest recession in three decades.

Swiss National Bank board member Thomas Jordan and economists at the KOF Swiss Economic Institute have warned unemployment may rise to nearly 6 percent next year, reaching the highest level since World War Two.

But others say the data point to a less extreme scenario.

"The employment situation is still deteriorating but at a slower pace, which is good news," said Huenerwadel.

"This is the most lagging of all lagging indicators, but even so unemployment may not reach the worse case assumption of 6 percent."

SECO said the number of jobless rose to 158,138 October, while the number of vacancies fell to 13,147 from 13,940 in September. Earlier this week the SNB's Jordan indicated the central bank was at present unlikely to exit loose monetary policy given that economic uncertainty remained extremely high.[ID:nL2458774]