Australia's unemployment rate climbed unexpectedly in July to its highest level since November 2010. The latest figures from the Australia Bureau of Statistics has prodded economists to cast a dim outlook that this may further worsen in the coming months if market conditions especially consumer confidence does not improve for the better.

The Australian Bureau of Statistics (ABS) reported unemployment rate increased 0.1 percentage points to 5.1 per cent in July. The median market forecast was for it to stay at 5.1 per cent for the month.

Figures show the number of people employed remained relatively unchanged at 11,450,500. A decrease in full-time employment, down 22,200 people was offset by an increase in part-time employment, up 22,100 people. The number of people unemployed increased by 18,000 people to 611,600 in July.

The ABS monthly aggregate hours worked series showed an increase in July, up 3.6 million hours to 1,621.4 million hours. The bureau reported a labour force participation rate in July of 65.6 per cent.

Macquarie Research economist Ben Dinte says the jobs data is consistent with what was seen in the business surveys in terms of business confidence, hiring intentions, and also in terms of job ads.

"We expect the unemployment rate to gradually tick higher, not racing up towards six per cent, but we do see a gradual increase rather than a decline," he said.

The Australian dollar lost almost one US cent after the data was released at 1130 AEST.