Deputy Prime Minister Julia Gillard has attributed Australia's surprise fall in unemployment to the federal government's stimulus measures.
The unemployment rate for January slipped unexpectedly to 5.3 per cent from 5.5 per cent in December.
Ms Gillard said the figure showed the "strength and resilience" of both employers and employees during the economic downturn.
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It also highlighted the help employers had from the government's economic stimulus.
Ms Gillard acknowledged that most of the 52,700 jobs created in January were part-time, but said the number of full-time positions was growing, as opposed to previous months.
The government was standing by the Treasury's forecast that unemployment would peak at 6.75 per cent by June 2011.
"Unemployment does tend to lag other economic indicators, which means you can continue to see unemployment to grow even as other economic indicators recover," Ms Gillard said.
NSW leads recovery despite topping jobless rate
Meantime while Australia continues to lead the country's economic recovery, it still has the highest jobless rate.
NSW's unemployment rate fell by 0.3 percentage points in January to 5.6 per cent, seasonally adjusted Australian Bureau of Statistics (ABS) data released on Thursday shows.
Queensland recorded the biggest fall in unemployment, however, with a fall of 0.4 points.
The drop indicates 7800 NSW residents joined the workforce in January.
Treasurer Eric Roozendaal said the figures showed the NSW labour market was recovering from the effects of the global financial crisis.
Mr Roozendaal said the NSW unemployment rate had now dropped every month since April 2009.
"This is a further step towards sustained recovery for NSW working families and shows NSW is leading the nation in economic recovery," he said in a statement.
However, the NSW unemployment rate of 5.6 per cent remains higher than the 5.3 per cent national average.
NSW now has the highest unemployment rate in the country after Queensland's rate dipped 0.4 points to 5.5 per cent.
Western Australia eased to 5.0 per cent from 5.1 per cent, while the Northern Territory fell to 3.3 per cent from 3.4 per cent.
Unemployment rates in Victoria and Tasmania were unchanged at 5.3 per cent and 5.2 per cent, respectively.
