Australia lost more full-time jobs in July than in any single month for 23 years, though an increase in part-time jobs meant the unemployment rate held steady at 6.9%, according to data from the Australian Bureau of Statistics.

Full-time employment fell by 79,200 jobs to 6.5 million, while part-time employment rose by 66,600 jobs to 2.5 million, the bureau said.

Overall, the economy shed 12,600 jobs in July, giving a labour force of 9.1 million.

But the government said the economy is improving and the impact will filter through to the employment figures by early next year.

Better times ahead

"Employment growth tends to lag the economy, so you would expect stronger growth in Australia as we pick up toward the latter part of 2001 to be reflected in further jobs in the beginning of 2002", said Treasurer (finance minister) Peter Costello.

Although the Australian dollar fell on news of the jobless figures, Mr Costello's optimism about future jobless figures was supported economic analysts.

"It's a lagging indicator and probably the worst is behind us", said Scott Haslem of UBS Warburg.

OECD agrees

A report from the Organisation of Economic Co-operation & Development (OECD) released on Thursday also said Australia's economy is likely to do better in the early part of 2002, though it warned that the impact of the slowdown in the United States carries risks for Australia.

Australia's economy grew by 1.1% in the first quarter of 2001, pulling out of a contraction in gross domestic product in the fourth quarter of 2000.

Job losses have been announced by several major companies, including phone operator One.Tel and Canadian telecoms equipment group Nortel Networks.

The government recently intervened to keep jobs in the car industry, seeking an assurance that Japan's Mitsubishi had no plans to close its factory in Adelaide.

The unemployment report triggered a rise on the bond market, while the Australian dollar dipped to 51.38 US cents before recovering later.