Australia's unemployment rate jumped to a 12-year high of 6.4 percent in January, official data showed on Thursday, providing more ammunition for the central bank to cut interest rates.
Economists had been expecting a rise to 6.2 percent from December's 6.1 percent but with the number of people employed falling by 12,200 it was worse-than-expected.
The Australian Bureau of Statistics said full-time employment dropped by 28,100 in January and part-time employment was up 15,900.
The weaker reading saw the Australian dollar plunge to near six-year lows, falling to 76.56 US cents after the figures were released from 77.26 US cents just prior.
The central bank last week cut forecasts for economic growth and inflation this year and warned unemployment would likely rise as the economy transitions away from a mining investment boom.
The warning followed a cut in interest rates this month to a new record low of 2.25 percent.
Quay Equities head of trading Tristan K'Nell said the jobless numbers left the door open to more rate cuts.
"The numbers probably continue to give the RBA the ammunition to continue to cut interest rates next month," he said.
"Improvement in employment is the major issue for our economy to go with other issues such as low business and consumer confidence, falling economic growth, an end to the mining cycle, low inflation and our major trading partners slowing."
Australia's unemployment rate has been edging up over the past two years as the economy prepares for an expected sharp fall-off in mining investment this year.
The resource-driven economy is also struggling under the impact of a fall in prices for key commodity exports, including an almost halving of iron ore prices in 2014 due to weakening demand from China.