The news triggered a half-cent bounce in the Australian dollar, which has been on a steady decline over recent months as Reserve Bank policy makers repeatedly signalled they are in no hurry to begin normalising the nation's ultra-low cash rate.

The last time the unemployment rate was this low was in November 2012, when the official cash rate was 3.25 per cent.

While there are key differences between now and six years ago – when wages growth was averaging 3.5 per cent compared to today's 2.1 per cent, and the Australian dollar bought $US1.05 versus Thursday's US74.11¢ – the economy looks to be on a more solid footing.

Signs supporting this view include the strongest business conditions on record, rising investment spending, and the fact that the post-boom fall in resources investment is no longer dragging on growth.

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison, at a joint press conference, both leapt on the "tremendous" jobs figures as unequivocally strong, noting in particular a sharpest rise in youth employment in 30 years.

"We have record jobs growth, strong jobs growth across the country, strong economic growth that will be the envy of most of the countries you will be meeting, Scott, at that G20 when you leave tomorrow," Mr Turnbull said.

RBA seen on hold into 2020


Despite the upbeat commentary, Australia's central bank is unlikely to lift the official cash rate before the second half of next year, according to financial market futures pricing, with several high-profile economists not anticipating hikes until 2020 at the earliest.

In the meantime, the US Federal Reserve is expected to have delivered several more interest rate hikes, which should maintain downward pressure on the Australian dollar.

Annette Beacher, an economist at TD Securities, suggested money market investors are "asleep at the wheel" in anticipating the official cash rate will remain unchanged through into the first half of 2019.

"If the unemployment rate slumps towards 5 per cent sooner rather than later (ie, not so gradual after all), the RBA's rhetoric 'should' turn more hawkish by year end.

"I do think wages are about to pop, but will they be 3 per cent as the RBA is soft-targeting?" she said, noting that union-negotiated wages agreements have lifted in recent months.

All eyes are now on next week's official second-quarter inflation numbers, which economists predict will show are still at the bottom end of the Reserve Bank's 2-3 per cent target.


One factor keeping the jobless rate from falling more rapidly is Australia's participation rate, which edged up to 65.7 per cent in June from 65.5 per cent in May.

While that means more jobs need to be created to pull the jobless rate down, higher participation is often seen as a sign of a strong labour market as more workers are encouraged to look for jobs.

The ABS data showed hours worked rose 0.6 per cent in the month, to be up 2 per cent over the year. Helped by booming NSW and Victorian economies, the labour market has grown by 339,000 jobs over the past 12 month, with just under half in the nation's biggest state.

The official figures mirror other indicators of an improving labour market, including rising job vacancies, which have reached the highest annual growth in 7½ years, as well as surveys showing businesses are enjoying positive conditions and expect to add more workers.

Full-time jobs rose by 41,200, with part-time jobs up by 9700.

The six-month annualised pace of jobs growth has slowed to 1.9 per cent from the 4.3 per cent peak in August last year, but growth over the last three months has jumped to an average of 28,000 per month, after stalling in the opening months of the year.

Annette Beacher, an economist at TD Securities, suggests money market investors are "asleep at the wheel". Peter Wells

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison, at a joint press conference, both leapt on the "tremendous" jobs figures. AAP