Australia's unemployment rate edged down for the second consecutive month to end 2019 at 5.1 per cent, its lowest level since March last year.

Key points: Solid growth in part-time work drove the unemployment rate down to 5.1 per cent in December

Solid growth in part-time work drove the unemployment rate down to 5.1 per cent in December The ranks of the unemployed fell by 13,000 to just below 700,000

The ranks of the unemployed fell by 13,000 to just below 700,000 The result is likely to ease the pressure on the Reserve Bank to cut rates at its February meeting

The improvement was driven by a solid gain of almost 29,000 jobs over December, however this was entirely due to part-time opportunities.

Full time employment fell by 300 jobs over the month.

Australian Bureau of Statistics chief economist Bruce Hockman noted full-time employment growth (1.5 per cent) remained below the average annual growth over the past 20 years while part-time employment growth (3.2 per cent) was above the average annual growth

"While there has been stronger growth in part-time employment over the past year, the underemployment rate is still where it was last December, at 8.3 per cent," said Mr Hockman.

A steady participation rate and the new jobs were enough to thin the ranks of the unemployment below 700,000 for the first time in almost a year.

RBA on hold

The unexpected fall in unemployment over November and December is likely to ease pressure on the Reserve Bank to cut rates at its next meeting in two weeks.

However, the current rate is still much higher than the 4.5 per cent level the RBA argues will lead to stronger wage growth.

IFM chief economist Alex Joiner described it as a very solid outcome.

"Seems the data may not provide any red flags for the RBA heading into its February meeting," Dr Joiner said.

Market betting on a rate cut eased from a 50/50 proposition to around 30 per cent, while the Australian dollar popped higher on the data release.

Jobs boom defies economic activity: CBA

Across the nation, only Victoria and the Northern Territory experienced an increase in unemployment.

Queensland's unemployment rate fell sharply by 0.6 per cent over the month, while Tasmania reported a similar improvement.

In seasonally adjusted terms, New South Wales's unemployment dropped to 4.5 per cent — around the level the RBA equates to full employment.

Over the year, the ABS said employment rose by an aggregate 263,000 with around two-thirds, or 177,000, of the new jobs going to female workers.

CBA's Gareth Aird said while the headline unemployment rate moved lower, other measures of labour market spare capacity, such as underemployment and underutilisation, remained elevated and continued to weigh on wages growth.

"The labour market continues to defy the activity data," Mr Aird said.

"The unemployment rate is now on a very gentle downward trend despite GDP growth running well below trend. Unemployment usually rises when the economy is running below trend."

Mr Aird argued it was too early to say the RBA had finished cutting interest rates.

"Bottom line, we have removed the February rate cut in our forecasts and pushed it back to April."