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The unemployment rate has climbed to 4.2 per cent in July — its highest level since November 2021 — as Australia's economy continues to slow down.
Data from the Australian Bureau of Statistics showed more than 58,000 jobs were created last month, with the majority in full-time roles.
However, the number of unemployed people grew by 24,000 people — lifting the participation rate to a record high of 67.1 per cent.
Economists had broadly expected the unemployment rate to remain steady at 4.1 per cent in July.
Despite the rise in the unemployment rate, the ABS's head of labour statistics, Kate Lamb, said the jobs market is still resilient.
"The unemployment rate rose to 4.2 per cent in July, with the number of unemployed growing by 24,000 people and employed by around 58,000. This combined increase lifted the participation rate to a record high of 67.1 per cent," she said.
"The employment-to-population ratio rose by 0.1 percentage point to 64.3 per cent, indicating employment growth was faster than population growth, and was just below the historical high of 64.4 per cent in November 2023.
"Although the unemployment rate increased by 0.1 percentage point in each of the past two months, the record high participation rate and near record high employment-to-population ratio shows that there continues to be a high number of people in jobs, and looking for and finding jobs."
However, Ms Lamb said that compared to before the pandemic, conditions remain "quite tight".
"The employment and participation measures remain historically high while unemployment and underemployment measures remain historically low, compared with what we saw before the pandemic," she said.
"This suggests the labour market remains quite tight."
Callam Pickering, a senior economist with jobs site Indeed, echoed the ABS's assessment.
"The Australian labour market is still very tight but is gradually moderating," he said.
"Rising participation is why the unemployment rate increase [sic] in July, despite employment jumping by 58,000."
The latest forecasts from the Reserve Bank of Australia expects the unemployment rate will rise to 4.3 per cent by the end of the year.
Economist Anders Magnusson from BDO said while Thursday's data re-affirms the RBA's forecasts, he said the relationship between wages and productivity was "concerning" and could hamper future rate cuts.
"My medium-term view of the economy is that unless we solve the productivity puzzle and produce more with less, a tight labour market and strong public demand, compounded by higher service wages, will prevent inflation and the cash rate from decreasing anytime soon," he said.
"Higher productivity leads to increased output and benefits employees through real wage growth, but productivity growth has been relatively flat lately. The latest ABS data reveals a 4.1 per cent growth in annual wage to the June quarter, driven by scheduled public sector wage increases.
"While a tight labour market has led to higher wages, these benefits won't be sustained unless productivity growth catches up and inflation continues to fall."
The rise in the number of people joining the unemployment queue in July comes after a number of high-profile job losses at major companies across the country in recent weeks.
Thousands of jobs were lost across Australia's mining sector in July, with up to 1,600 workers made redundant by BHP after the mining giant announced it would close its nickel operations by October.
Andrew Forrest's Fortescue also slashed 700 jobs in July in an attempt to streamline the company.
Last week, US-based lithium miner Albemarle confirmed 300 jobs would be lost from its Kemerton plant near Bunbury in Western Australia.
Core Lithium also cut 150 jobs after shutting its mine in Darwin in July — less than two years after it opened.
Another 600 workers lost their jobs when regional airline Rex collapsed late last month.
According to Leigh Broderick, the head of market data at job advertising site Seek, those workers looking for a new role will face stiff competition.
"When we look at job ads on Seek, they have been declining fairly consistently for a year or two, but in the more recent months, that … has started to taper off a little bit," he said.
"Last month, going from June to July, we saw the first month-on-month increase [in job advertisements] for some time."
Mr Broderick said year-on-year, job advertisements on Seek were down by 15 per cent.
"But translate that into applications per ad … that is well above where it would normally be.
"That indicates to us that there is a lot of candidates interested in a smaller number of roles."
On average, he said employers were seeing a surge of 60 per cent in applications for their roles, with some hirers receiving hundreds of applications for one or two positions.
"The number of opportunities is much less, and there are a lot of candidates looking for roles," he said.
"At the moment, the balance is towards the hirers. They have a lot more choice than they did a year or two ago.
"Unfortunately for candidates, it is quite hard to find roles at the moment because there's a lot of competition."