The jobless rate was the highest since August 2009, when the economy was weathering the global financial crisis, and would have been even higher if not for an unexpected drop in the participation rate.

The aussie was plucked off a six-month high of US$0.9355 and unceremoniously dumped to US$0.9260 following the data.

Investors began to wager on another cut in interest rates, having almost abandoned thoughts of a move given recent better economic news from China and much of the developed world.

"It's a bit of tempering of that optimism that emerged about the economic outlook in the last few weeks," said Michael Blythe, chief economist at Commonwealth Bank.

"It's the old story that as long as the unemployment rate is trending up, as it is at the moment, then the RBA will still be thinking about interest rates each month and whether they need to cut them again."

Interbank futures show a 50 per cent probability of a rate cut by Christmas, compared with 38 per cent before the jobs report.

Yields on three-year government debt pulled back to 2.9 per cent from a six-month peak of 3 per cent.

Swap rates swung back to pricing in an easing on a 12-month horizon, albeit of only 2 basis points. Early in the week they were implying almost 10 basis points of rises.

The central bank cut rates to a record low of 2.5 per cent last month and has been hoping lower borrowing costs would encourage consumers to pare back their high levels of savings and spend more.

That in turn would give businesses a reason to invest and help offset a cooling of the mining boom.

There was some encouragement this week when surveys showed a marked improvement in confidence among consumers and business, in part on expectations an election on September 7 would lead to a new government, which it did.

The pro-business Liberal-National coalition won a majority, ending three years of minority rule by the Labor Party.