Unemployment has hit a fresh 29-year low as record numbers of Australians head off to work.

New figures released today show the unemployment rate dipped by 0.1 percentage point to 5.0 per cent in June - its lowest point since November 1976.

And the number of Australians in work hit the 10 million mark for the first time.

Prime Minister John Howard hailed the surprising results as an historic milestone, but said it was not a signal for the government to shy away from its controversial industrial relations reforms.

"I want this unemployment rate or even a lower unemployment rate in five years time, and the only way we can guarantee that we keep unemployment low is to continue the process of economic reform, and that is directly relevant to the debate on workplace relations," he told reporters.

The Australian Bureau of Statistics (ABS) found that total employment increased by 41,700 to a record 10.023 million in June, with the number of full-time workers rising to 7.19 million.

Those in part-time work fell 18,500 to 2.83 million and the number of jobless people dropped 1,200 to 528,500.

Unemployment fell across most states and territories, with the ACT recording the lowest rate (3.1 per cent) followed by Queensland (3.8 per cent).

Labor's acting employment spokesman Chris Evans welcomed the fall in unemployment but said more work needed to be done to address Australia's skills shortage.

"There are still 1.7 million Australians who are officially unemployed or want to work," he said.

"The Howard government should be training Australians first and Australians now."

The ABS figures surprised economists, with many having expected a flat unemployment result for June ahead of the labour market starting to soften in the next few months.

"Leading indicators and business surveys point to moderating demand for labour and we continue to look for softer outcomes ahead," UBS senior economist Adam Donaldson said.

"However, the resilience of employment suggests there may be an unusually large amount of job hoarding taking place, perhaps because skilled workers are hard to find and the downturn is only expected to be shallow and short-lived."

Economists also expect the latest data will help keep interest rates on hold and dampen any expectations of a rate cut.

"The latest surge in jobs should well and truly silence any talk of rate cuts," CommSec's chief equities economist Craig James said.

"But the Reserve Bank also won't be rushing to the table to increase rates.

"Provided unemployment continues to edge lower rather than plummet, wage and price pressures will remain contained, thus keeping the Reserve Bank on the interest rate sidelines."