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Australia’s unemployment rate hit six per cent last month, the highest level since July, 2003, new data shows.

The increase is bigger than forecast, with economists expecting a 0.1 per cent increase to 5.9 per cent in the monthly gauge.

The Australian dollar fell by more than three quarters of a US cent after the release of the weaker-than-expected figures.

The number of people with jobs fell by 3,700 to 11.46 million during the month. Economists had expected total employment to rise by 15,000 in December and unemployment to be 5.9 per cent.

At 11.37am AEDT, the Australia dollar was worth 89.39 US cents, down from 90.25 cents just before the data was released.

State-by-state

Unemployment remained steady in NSW at 5.8 per cent, while joblessness in Victoria rose from 6.2 per cent to 6.4 per cent.

Queensland saw a rise from 5.9 per cent to 6.1 per cent, while South Australia dipped from 6.8 per cent to 6.6 per cent.

Western Australia saw a sharp rise from 4.6 per cent to 5.1 per cent, while Tasmania remained flat at 7.6 per cent.

‘Big job ahead’

The latest unemployment figures show the size of the economic challenge before the government, Treasurer Joe Hockey says.

“The disappointing labour force figures revealed today are the unfortunate reality of six years of Labor government,” Mr Hockey told reporters in Canberra.

“They are not unexpected but they indicate the size of the challenge we have before us.”

Opposition Leader Bill Shorten said a rise in the jobless rate shows the coalition government did not have a plan for the economy.

“The Abbott government has got serious questions to answer,” Mr Shorten said.

“What is the jobs plan of the Abbott government? What are they doing to stop the tens of thousands of jobs that are either going overseas or just disappearing?”

Asked whether the previous Labor government took any responsibility, Mr Shorten said: “The Abbott government is in charge.”

Labor employment spokesman Brendan O’Connor said the participation rate was lower than at any time since April 2006.

“Eligible people have stopped looking for work because they have no confidence that the government is helping create the environment to produce jobs,” Mr O’Connor said.

Before the data was released, ANZ head of Australian economics Justin Fabo said the pace of jobs growth was still not enough to bring the unemployment rate down.

“Overall, most labour market indicators still suggest that underlying employment growth remains soft,” he said.

JP Morgan Australia chief economist Stephen Walters also said employment growth remained weak.

“Job advertisements and vacancies are still moving backwards, and the levels of the NAB business survey employment intentions index remain in line with the poor average level that has held through the Reserve Bank of Australia’s easing cycle,” he said.

“For this reason, we see little scope for relief from the upward trend in the unemployment rate in this week’s labour force survey.”