(Updates with analyst, finance ministry)
SEOUL, July 15 (Reuters) - South Korea's jobless rate rose to its highest in over eight years in June as the country battled its worst economic slump in a decade, underlying the need for authorities to continue stimulus measures.
The nation's seasonally adjusted unemployment rate rose for a third straight month to 4.0 percent in June, the highest level since April 2001, the National Statistical Office data showed on Wednesday.
However, the country added 4,000 jobs in June over a year earlier, the first annual gain since November 2008, as the government hired more workers under a state-led job creation programme.
"The increase in jobs was driven by the state subsidies. Most employers in private sector, especially service businesses, reduced their work force," said Lee Sang-jae, an economist at Hyundai Securities.
Lee said the jobless rate rose because the state incentives had induced more people to look for work.
"I don't see any hope yet in the job market. It will remain in a deep depression as long as domestic demand stays weak. The dark outlook would be one of the major reasons for the central bank to stay pat on rates in the near future," he said.
After the data was released, a finance ministry official said that job losses for this year could be much reduced if the government-led job creation programme succeeded.
The nation may lose around 100,000 jobs this year in an optimistic case if current job market conditions continue well into the second half, finance ministry director Yoon Jong-won said.[ID:nSEO253086]
The finance ministry said in late June that between 100,000 and 150,000 people could lose their jobs this year.
Separately, the finance minister warned earlier on Wednesday that the recent global financial and economic crisis might have halved the country's growth potential to 2 percent. (Reporting by Cheon Jong-woo and Seo Eun-kyung; Editing by Kim Coghill)