Unemployment is likely to continue rising into next year, leading economists predicted last night following news that the number of people out of work in the year to the end of August had increased by 12,200.

The Central Statistics Office (CSO) published its Quarterly National Household Survey yesterday. The survey shows there were 98,900 people out of work in the State in the third quarter of the year (June, July and August). This was a 12,200 increase on the same period in 2002, when there were 86,700 unemployed.

This pushed the unadjusted unemployment rate to 5.2 per cent in the third quarter of 2003 from 4.6 per cent during the same period last year, the CSO said. The adjusted rate rose to 4.9 per cent from 4.6 per cent over the same timescale.

The number of short-term unemployed grew by 7,000 to 71,000, while the ranks of those out of work for more than a year swelled by 5,000 to 26,700.

The numbers at work grew to 1.82 million from 1.795 million last year. But labour force growth overtook the rate of job creation, hitting 1.92 million from 1.88 million during the same period in 2002.

Public service employment grew by more than 20,000 year-on-year, while industrial job numbers fell by 9,600. The numbers in the key manufacturing category, plant and machinery operatives, were down 17,400 to 169,600 from 187,000.

Two leading economists last night predicted that jobless numbers would continue growing in the first and second quarters of 2004.

Mr John Beggs, chief economist with AIB Group Treasury, said the Irish economy would lag any likely global upturn, and forecast that the adjusted rate could overtake 5 per cent during the opening months of 2004, before beginning to fall.

Friends First chief economist Mr Jim Power suggested the rate could reach 5.3 or 5.4 per cent before falling back.

He warned that indigenous manufacturing, however, would continue to lose jobs as the Republic's high cost base, infrastructural problems and the appreciating euro took their toll.

Mr Power also argued that the multinationals could not be relied on to drive future jobs growth.

"We cannot guarantee that they are going to invest in this economy," he said. "Competition from China and India for mobile investment has been very intense and Ireland is a lot less competitive than it was three years ago."

He said the services sector was likely to create most of next year's jobs. Mr Power also warned that the overall quality of jobs in the State was beginning to decline.

He pointed out that part-time jobs increased by 16,300 to 307,200 in the year to the third quarter, while full-time numbers grew by just 9,500 to 1.513 million.

"I find the qualitative change in the jobs that we are creating and the fact that we are losing a lot of manufacturing jobs worrying," he said.

Mr Power blamed the Government's failure to halt the decline in Irish competitiveness for both problems.

IIB chief economist Mr Austin Hughes said the figures marked the low point for the Irish jobs market. "The global economic upturn has strengthened substantially in recent months," he said. "Recent tax data suggest this has translated into an improvement in the Irish economy. In addition, numbers on the live register have fallen for the past four months and Irish consumer sentiment has risen steadily over the same period."

Last night, the Irish Small and Medium Enterprise association (ISME), warned that the indigenous manufacturing sector was facing a stark future.