Australia's unemployment rate was a seasonally adjusted 5.3 per cent in July, compared with an unrevised 5.1 per cent in June, according to data issued today by the Australian Bureau of Statistics (ABS). With the softer job figures, economists predict there will no more interest rate increases this year.

While overall employment expansion was in line with expectations, there were more people looking for work which resulted in the rise in unemployment rate, said CommSec economists Craig James.

He said the lesser jobs number was expected after several months of a slowdown in retail spending, and more caution from manufacturing and services sectors.

"We have seen indications of a softening economy and this has finally caught up with the jobs market.

The good news from today's figures is that interest rates are clearly on hold until at least the end of the year, with most economists talking about 2011 as the next move, Mr James said.

He said that at a time when there is a moderate rise in the jobless rate, stagnant retail spending and weak housing market, it will be hard to find any justification for the central bank to be lifting any rates.

"So the Reserve Bank certainly has work to do in terms of interest rates," said Mr James.

ABS data revealed total employment increased by 23,500 to 11.236 million in July, seasonally adjusted. Full-time employment, meanwhile, slumped by 4,200 to 7.866 million and part-time employment climbed by 27,700 to 3.369 million.

The participation rate in July increased to 65.5 per cent, from an upwardly revised 65.3 per cent in June.