The number of people unemployed topped one million as the jobless rate rose to 7.5 per cent in July from 7.4 per cent in the previous month.
The number of people unemployed has topped the one million mark for the first time since records began 42 years ago as Australians continue to feel the devastating impact of the coronavirus pandemic.
The jobless rate rose to 7.5 per cent in July from 7.4 per cent the previous month, despite a large jump in the number of people who found work.
The Australian Bureau of Statistics data shows 114,700 people found employment in July as virus restrictions were eased in most parts of the country.
This included 43,500 full-time positions.
The participation rate of those people in work or actively seeking employment in July rose to 64.7 per cent, causing the unemployment rate to rise.
However, ABS head of labour statistics Bjorn Jarvis said employment remained more than half a million people lower than seen in March.
"The July data provides insight into the Australian labour market during stage three restrictions in Victoria. The August labour force data will provide the first indication of the impact of stage four restrictions," he said.
BIS Oxford Economics chief economist Sarah Hunter expects employment will slip back in August as Victoria's stage four restrictions take their toll.
"The requirement to actively seek work to continue receiving JobSeeker being reintroduced in early August, the unemployment rate is set to track higher," Dr Hunter said.
The Reserve Bank expects the unemployment rate to hit 10 per cent by the end of this year and still be about seven per cent in two years time.
Reserve Bank governor Philip Lowe will be grilled on this outlook when he faces federal politicians on Friday.