Australia's jobless rate is tipped to rise as the non-mining sector fails to pick up the slack from the wind down in mining investment.
Unemployment is expected to have reached 5.9 per cent in May, from 5.8 per cent in April, when the Australian Bureau of Statistics releases the latest jobs figures on Thursday.
The economy is expected to have added 10,000 jobs while the participation rate - those that have a job, are looking for work or are ready to start work - is expected to have remained steady at 64.7 per cent, an AAP survey of 13 economists found.
The problem is that while jobs are being shed following the end of the mining investment boom, businesses outside the resources sector remain too cautious to pick up the slack and hire people, JP Morgan chief economist Stephen Walters says.
There's also 16,500 jobs being cut from the public sector, as revealed in the federal government's May budget.
"The mining investment boom was very labour intensive but the export phase of the boom is much less intensive," Mr Walters said.
"So there's a lot of jobs, probably 40,000 or 50,000 jobs, being spun out of the mining investment boom and they need to be taken up somewhere else.
"But it doesn't seem like there's a lot of appetite out there for hiring, particularly in retail, manufacturing and finance."
Businesses are worried about consumer confidence, which recently took a hit from the tough spending cuts outlined in the May budget.
Consumer caution, along with the high Australian dollar and an increase to the minimum wage last week, are all disincentives for firms to hire people, Mr Walters said.
Figures released by ANZ on Tuesday showed the number of job advertisements had fallen for the first time in five months in May.
AMP Capital chief economist Shane Oliver said jobs growth would dip after a strong start to the year but bounce back later in 2014.
"The main thing business needs to see is stronger demand, which has been given a boost by low interest rates and the decline in the Aussie dollar from 2011 levels," he said.
"At some point, confidence will bounce back after the hit from the budget, which was a short-term risk to the economy and the unemployment rate.
"Basically what businesses want to see is increased demand and I think as the year proceeds, we will start to see that."
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