While the unemployment rate came in line with forecasters' expectations at 4.4 per cent in June, a sharp rise in employment of 76,300 jobs far exceeded consensus estimates of 15,000 new jobs.
Despite a gradual softening in the labour market over the past year, Thursday's Australian Bureau of Statistics labour force survey painted a picture of a jobs market that remains resilient.
The surge in jobs was driven by a 47,000 person rise in part-time employment, said Sean Crick, ABS head of labour statistics.
"Part of the growth in employment this month came from those who were waiting to start a job in May. This represents a stronger June movement than has been observed in recent years," he said.
"We also continued to see higher numbers of people remaining employed this June, following elevated levels in the recent few months."
The participation rate rose by 0.3 percentage points to 67 per cent - the highest level since July 2025.
With the economy close to full employment, the inflation side of the RBA's dual mandate would be the focus of the bank's deliberations, VanEck senior portfolio manager Cameron McCormack said.
"We believe there is at least one more rate hike coming this year, and a considerable chance that we will see two hikes," he said.
"Australia's labour market is determined not to give the RBA the breathing room it needs."
A re-escalation in the Middle East conflict in recent weeks has halted traffic in the Strait of Hormuz once more and sent the Brent oil price benchmark soaring back towards the $US100 a barrel mark.
It adds another layer of inflationary pressure through higher transport and supply chain costs, Mr McCormack said.
"If these pressures begin feeding more broadly into goods and headline inflation, the case for another rate hike could be brought forward," he said.
Higher inflation could also hit consumer spending, diminishing hiring activity for Australian firms and posing a double-edged dilemma for the RBA.
Job ads figures released by online employment marketplace SEEK showed advertised roles fell 0.9 per cent in June and are now 5.8 per cent lower than 12 months prior.
In minutes from the monetary policy board's June meeting, members noted that while the unemployment rate was weaker than had previously been expected, other indicators such as the underemployment rate were still resilient.
Since the Middle East ceasefire collapsed, markets have slashed the odds that the Reserve Bank could add to the three rate rises it has already delivered in 2026.
Before the release, financial markets were pricing in the chance of an August rate hike at 25 per cent. The chance the RBA would hike once more by year-end was priced at 84 per cent.
Following the jobs report, the chance of an August hike moved to about 33 per cent and a hike by year end moved to 95 per cent, IG market analyst Tony Sycamore said.
The robust report will align with the RBA's view that labour market conditions remain resilient, he said.
"The RBA's key concern will be that this tightness feeds into wage growth and, more broadly, into inflation in an economy where price pressures are already uncomfortably high - especially with crude oil up 26 per cent this month."
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