Australia's economy shed 26,200 full-time jobs last month, as companies cut staff to weather the economic downturn. New South Wales posted the highest jobless rate.
The job losses pushed the unemployment rate up to 5.7 per cent, the Australian Bureau of Statistics reported. Economists had tipped the nation's workforce lost 30,000 jobs during the month, sending the jobless rate to 5.7 per cent.
''If you look over the last six months, we've had about 80,000 full-time jobs lost in that period of time, and pretty much no
overall job creation,'' Su-lin Ong, senior economist at RBC.
In May, the economy lost a net 1700 jobs. There were 24,500 part-time created in the month, almost offsetting the 26,200 full-time positions shed.
Employment Minister and Deputy Prime Minister Julia Gillard said the global recession was affecting the Australian jobs market and that was confirmed by the data released today.
"The global recession is hitting the Australian economy and Australian jobs,'' she said.
"We're not immune. As a result of the global recession these are tough times for working people right around the globe.
"Here in Australia, the government has acted decisively to support Australian jobs.''
Ms Gillard said Australia was "are strongly positioned compared to other countries - we've acted here to cushion Australia from the full effects.''
Opposition leader Malcolm Turnbull said it was a ''tradegy'' that people cannot get work, and that ''every sinew of government'' should be working to preserve jobs.
''We wish (the jobless rate) was lower. There's been an increase of nearly 200,000 out of work since August last year,'' he told reporters in Sydney.
In the past few months, companies ranging from Rio Tinto to Qantas have announced job cuts as the fall-out from the global recession affects operations in Australia.
Data out last week showed the economy expanded in the first quarter of 2009, avoiding two straight quarters of contraction and the resulting technical recession. Analysts, though, have warned that the economy remains weak with the unemployment rate on course to peak near 9 per cent.
The Australian dollar jumped almost half a US cent on the announcement, rising to 81.1 US cents as investors viewed today's jobless figures are reducing the chances of another interest rate cut by the central bank.
The participation rate edged higher to 65.5 per cent from 65.4 per cent in April.
"The unemployment rate is rising mostly because the participation rate went up,'' said Stephen Roberts, an economist at Nomura. ''So even with reasonably good employment performance, the unemployment rate is still inching its way higher.''
''There's not much in this that would change the RBA outlook because it's a fairly small sample size, but I suspect we'll tend to see weaker employment over time," Mr Roberts said.
Michael Blythe, chief economist at Commonwealth Bank, said the latest jobless figures underscore the strength of the economy.
"Another very good result...this is a very positive development,'' Mr Blythe said.
''You put it together with...GDP numbers stronger than expected, (a) rebound in consumer confidence, housing up, a lot of things seem to be heading in the right direction for the Australian economy right at the moment,'' he said. ''It means the Reserve Bank (of Australia) keeps sitting on the sidelines".
Among the states, NSW had the highest jobless rate, with the figure jumping to 6.4 per cent in May from 6.1 per cent in April. A year earlier, about 4.7 per cent of the state's workforce was out of work.
Victoria was the next worst, with a jobless rate of 5.9 per cent, up from 5.7 per cent in April. A year ago, the state's jobless rate was 4.3 per cent.
Bucking the trend were South Australia and Tasmania, with both states recording a fall in the jobless rate last month. SA's tally eased to 5.4 per cent from 5.5 per cent in April. Tasmania's jobless rate fell to 5.7 per cent from 6.1 per cent.
The end of the mining boom took its toll on Queensland and Western Australia. Queensland's unemployment rate rose to 5.3 per cent last month from 4.9 per cent in April.
WA's jobless rate rose to 4.9 per cent in May from 4.6 per cent.
The figures out today include a revision in the national April jobless figure to 5.5 per cent from the initial 5.4 per cent reading.