The total number of people with jobs fell 4,800 to 11.565 million in May, according to seasonally adjusted figures from the Australian Bureau of Statistics on Thursday.
The ABS says the drop is due to decreased male and female part-time employment.
The unemployment rate was expected to reach 5.9 per cent in May, with 10,000 jobs added to the economy, according to an AAP survey of 13 economists.
Full-time employment rose 22,200 to 8.068 million in May and part-time employment was down 27,000 to 3.496 million.
The participation rate - those that have a job, are looking for work or are ready to start work - fell to 64.6 per cent, from 64.7 per cent in April.
State by state unemployment rates in May
NSW - 5.7% up from 5.4% in April
Vic - 6.2% down from 6.4%
Qld - 6.2% down from 6.3%
SA - 6.8% up from 6.2%
WA - 5.0% up from 4.9%
Tas - 7.5% down from 7.6%
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