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UPDATE 1-Australia Oct jobs surpass f'cast, unemployment ticks up

* Oct employment +178,800 vs -30,000 consensus

* Oct jobless rate 7.0% vs 7.2% consensus (Adds economist comments)

SYDNEY, Nov 19 (Reuters) - Australian jobs surged past all expectations in October led by an easing of virus restrictions in the second-most populous state of Victoria, though the unemployment rate still ticked up to 7.0% as more people went out looking for work.

Figures from the Australian Bureau of Statistics (ABS) on Thursday showed employment escalated by a solid 178,800 in October, after slipping in September.

Economists polled by Reuters were predicting a fall of 30,000 with the unemployment rate rising to 7.2%.

“This strong increase means that employment in October was only 1.7% below March, and reflects a large flow of people from outside the labour force back into employment,” said Bjorn Jarvis, head of Labour Statistics at the ABS.

Though the overall outcome far exceeded forecasts, the figures highlight the challenges for the recession-stricken economy with the jobless rate widely expected to peak around 8%, economists said.

A requirement for those receiving government welfare payments to actively seek work would see the labour force expand further. A six-day lockdown in South Australia also casts a shadow on broader recovery prospects.

For its part, the Reserve Bank of Australia (RBA) has slashed the cash rate to near zero and launched a A$100 billion quantitative easing (QE) programme, saying creating jobs was a “national priority.”

That and the government A$300 billion fiscal stimulus is paying off. During Australia’s national lockdown, from March to May, jobs fell 872,000. Since then, they have risen 648,000 recouping three-fourths of the drop.

“The data clearly indicate that the positive health outcomes and fiscal and monetary support are all helping to propel a rebound in activity,” said Sarah Hunter, economist at BIS Oxford. “Assuming the pandemic remains under control, most particularly that the current lockdown in South Australia snuffs out the outbreak there, the recovery should continue going into 2021.” (Reporting by Swati Pandey; Editing by Muralikumar Anantharaman and Christopher Cushing)