Jan. 15 (Bloomberg) -- Australia's economy added 29,600 jobs in December, almost double the median economist forecast, as companies such as travel agency Flight Centre Ltd. and retailer Sheridan Australia Ltd. hired workers to meet rising demand.

Full-time employment rose by 16,100 last month and part-time jobs gained by 13,500, the Australian Bureau of Statistics said in Sydney. The jobless rate remained at a 14-year low of 5.6 percent.

Bonds declined as the extra jobs and a report yesterday showing consumer confidence is at a 10-year high added to expectations the central bank may increase interest rates for a third month in four in February. The bank raised its benchmark rate to 5.25 percent, the highest since 2001, in two moves in November and December.

``With the economy going so well, people have more money to spend on holidays,'' said Haydn Long, a spokesman for Flight Centre, the nation's biggest travel agency. ``We're continually opening new stores and expanding our operations so we'll continue to hire new staff over the next year.''

Flight Centre hired about 130 employees last month, taking its Australian workforce to about 4,000.

Australia, Asia's fifth-biggest economy, has added jobs for five straight months to December. Employment increased 188,800 in 2003, with almost 80 percent of those positions full time. Almost 9.7 million Australians were working in December, 6.9 million of them full time, and there were 574,900 unemployed. Australia's population is 20 million.

Retail Sales

The unemployment rate declined from 6.1 percent at the start of last year. It hasn't been lower than 5.6 percent since June 1981, when it reached 5.4 percent.

The U.S. December jobless rate was 5.7 percent, Germany's was 10.4 percent and Japan's was 5.2 percent in November. Japan's jobless rate has almost doubled in the past decade.

Employment gains will fuel retail spending, which has been driving economic growth. Retail sales increased 1.4 percent in November, the largest monthly increase in a year and the 11th successive gain.

``We have opened 10 stores since July and we have been adding staff every month, including December,'' said Angela Tosatto, staff manager at Sheridan Australia Ltd., the nation's largest bed linen and towel manufacturer with 600 staff and 70 stores. ``Sales have been extremely strong.''

Jobless Rate

The median forecast of 21 economists surveyed by Bloomberg News was for the jobless rate to remain at 5.6 percent and 15,000 jobs to be created in December.

The Australian dollar bought 77.63 U.S. cents at 12:50 p.m. in Sydney trading from 77.47 cents before the report. The yield on a benchmark government 6.5 percent bond maturing in May 2013 rose to 5.58 percent from 5.56 percent.

Fourteen of 21 economists surveyed by Bloomberg News forecast the central bank will raise its overnight cash rate target a quarter percentage point to 5.5 percent on Feb. 4. Seven expect the rate to be kept unchanged.

``There is a case for a rate rise,'' said Stephen Miller, who helps oversee the equivalent of $3 billion in bonds at Merrill Lynch Investment Managers in Sydney. ``The bank-bill futures are pretty much saying there will be a tightening this quarter.''

The implied yield on the March 90-day bank bill futures fell 4 basis points to 5.56 percent, signaling some investors expect a rate increase in the first quarter. A basis point is 0.01 percentage point.

Consumer Confidence

In another sign the economy is gaining strength, after growing at its fastest pace in almost two years in the third quarter, consumer confidence rose 4.8 percent in December to the highest since July 1994, Westpac Banking Corp. said yesterday.

Still, the gain in the Australian dollar and signs the housing market is slowing may allow the central bank to keep interest rates unchanged next month, some economists said.

The Australian dollar rose 34 percent against the U.S. currency in 2003, the biggest annual gain in 20 years. It hit a 6 1/2 year high of 78.12 U.S. cents this week. A higher dollar lowers exporters earnings when their overseas sales are bought home. The central bank has said it expects exports, which make up one-fifth of the economy, to drive economic growth this year.

The participation rate, a measure of those with jobs or seeking work, rose to 63.8 percent in December from 63.7 percent in November.

Last Updated: January 14, 2004 22:46 EST