Unemployment has continued its steady grind higher, hitting 5.3 per cent in August.

Key points: Unemployment has risen steadily since its decade long low of 4.9pc in February

Unemployment has risen steadily since its decade long low of 4.9pc in February While 50,200 part-time jobs were created in August, 15,500 full-time jobs were lost

While 50,200 part-time jobs were created in August, 15,500 full-time jobs were lost South Australia's has the highest unemployment rate at 7.3pc, while NSW has the lowest at 4.3pc

It has been rising since hitting a seasonally adjusted decade low of 4.9 per cent in February and is now at its highest point since June last year.

It is disheartening for the Reserve Bank, which has been hoping the trend would be moving down to 4.5 per cent — its theoretical idea of full employment that would drive wages growth up.

It is, of course, worse for the estimated 716,800 people stuck in the jobless queue.

The increase in unemployment comes despite an estimated 34,700 jobs being added last month.

However, that increase was heavily skewed to part-time work, with more than 50,000 part-time positions being created, while 15,500 full-time jobs were shed.

The quality of job creation is also becoming an issue, with the annual pace of full-time job creation slowing back to levels seen at the end of last year, while full-time work as a percentage of jobs created is now at its lowest level in more than a year.

"In recent months employment growth has been driven more by part-time roles," Indeed economist Callam Pickering said.

"There is also a growing divergence between employment growth and growth in hours worked," Mr Pickering noted.

"That suggests that while the economy is still creating jobs, it isn't necessarily creating the same quality of jobs as it was a year or two ago."

Wages remain under pressure

The data does little to support a pick up in wage growth, with little erosion in labour market spare capacity.

As the number of people looking for work edged up, the underutilisation rate — those who are either unemployed or looking for more hours of work — rose again to 13.8 per cent.

BIS Oxford economist Sean Langcake said the figures provide further evidence that the labour market may be losing some momentum.

"While employment growth has been reasonably healthy over the past year, the demand for labour is being met with increased supply. This is working to keep a lid on wages growth," Mr Langcake said.

A large part of that increased supply came from booming population growth.

The latest quarterly ABS data show Australia's population grew by another 389,000 — or 1.6 per cent— in the 12 months to March, driven by a 250,000 rise in net overseas migration.

UBS economist George Tharenou said the obvious implications were that unemployment will continue to trend up and the RBA would have to cut interest rates again, as early as next month.

"After Q2 [second quarter] GDP dropped to the worst since the GFC, the unemployment rate is rising and lead indicators indicate ongoing softness," Mr Tharenou said.

"Given the RBA's minutes strengthened their easing bias, stating they 'would assess developments in both the international and domestic economies, including labour market conditions, and would ease monetary policy further if needed', we still expect a … 25-basis-point cut in October."

Net overseas migration is the largest contributor to Australia's annual population growth rate of 1.6pc. ( Source: ABS )



NSW and Victoria lead job ad slump

The figures also point to the gap in Australia's two-tiered jobs market widening.

New South Wales, Victoria and the ACT continue to enjoy unemployment rates below 5 per cent, considerably lower than the other states.

South Australia suffered a sharp spike in unemployment, up 0.4 per cent on a seasonally adjusted basis to 7.3 per cent — the highest across the nation by a considerable margin.

"There is a real concern that if conditions deteriorate in Sydney and Melbourne, even by a bit, then the entire labour market would deteriorate rapidly," Mr Pickering said.

Those concerns may well be realised, judging by the latest job ad figures showing a collapse in employment opportunities in both those capital cities last month.

Online job agency SEEK said ads plummeted almost 17 per cent in Sydney and 12 per cent in Melbourne in August compared to a year earlier. There were also sharp declines in Brisbane and Adelaide.

SEEK's Australia/New Zealand managing director Kendra Banks said weak economic growth and private sector investment were at the heart of the jobs slowdown.

"Low consumer spending is having a direct impact on business spending, with many companies tightening their budgets, which can include a restriction or freeze on hiring," Ms Banks said.

"This can be seen across the country with the visible reduction of new job opportunities."