The employment market has turned on a gold medal performance, with an unexpected fall in the jobless rate, but that's unlikely to dampen the prospect of further official interest rate cuts.
Federal Treasurer Wayne Swan said on Thursday the dip in the unemployment rate to 5.2 per cent in July helped reinforce the view that Australia's economy was in a "league of its own".
The Australian Bureau of Statistics labour force report also showed the number of people in work grew by 14,000 in July, more than the 10,000 forecast by economists.
Full-time employment rose by 9200, while part-time employment increased by 4800.
Economists had expected a jobless rate of 5.3 per cent, in line with an upwardly revised 5.3 per cent in the previous month.
"Australia's outstanding economic record stands in stark contrast to many developed economies, which continue to experience weak or negative growth and stubbornly high unemployment levels," Mr Swan said in a statement.
Employment Minister Bill Shorten described it as a "gold medal-winning performance", achieved in spite of a difficult global economy.
"It's not just in London in the Olympics that Australians are trying to do their best. We are seeing that in the unemployment numbers," Mr Shorten told reporters in Melbourne.
The treasurer said the report was more evidence that Opposition Leader Tony Abbott's scare campaign on the federal government's carbon pricing regime and mining tax was "absolute baloney".
But Mr Abbott said employment was down a net 14,000 when the June and July results were taken together and blamed the carbon tax that started on July 1.
"This carbon tax is going to be a wrecking ball going through our economy. It is going to cost jobs big time," he told reporters in Brisbane.
Opposition employment spokesman Eric Abetz said any decrease in unemployment was "good news".
"The question is whether these figures are based on the real world economics, or whether they are based on some of the stimulus spending that has been thrown into the economy, which is a short-term sugar fix, rather than good solid staple diet," Senator Abetz told ABC TV.
The Labor government started rolling out its carbon price compensation package and a new education bonus to households in May and June, at the same time the Reserve Bank of Australia (RBA) was cutting interest rates.
ANZ senior economist Justin Fabo expects the RBA will sit on the sidelines for some time to gauge the impact of those rate reductions.
"We continue to expect the next move in interest rates to be down, with the RBA coming to the view that the economy can grow more strongly than it is without generating inflation pressures," he said.