The unemployment rate has fallen back to 3.5 per cent in February from 3.7 per cent the previous month.
Around 64,600 jobs were added to the economy over the month, official Australian Bureau of Statistics labour force data shows.
"With employment increasing by around 65,000 people, and the number of unemployed decreasing by 17,000 people, the unemployment rate fell to 3.5 per cent," ABS head of labour statistics Bjorn Jarvis said.
"This was back to the level we saw in December."
The participation rate rose 0.1 percentage points to 66.6 per cent, also back to its December level.
"The February increase in employment follows consecutive falls in December and January," Mr Jarvis said.
Many economists expected a bounce back in the employment numbers due to the unusually high number of people waiting to start a new job in the month prior.
BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said these people have instead been captured in the February report, effectively unwinding the weak January result.
Across the states, the ACT recorded the lowest unemployment rate of 2.9 per cent, followed by NSW, at 3.2 per cent.
The return to a national unemployment rate in the mid-threes will likely support the case for further interest rate rises.
"The labour market continues to track in a very strong position, and is starting to generate faster wage growth," Mr Langcake said.
He said labour cost pressures were still under control but the Reserve Bank would be wanting to make sure this remains the case.
The RBA has softened its communications around future rate hikes and indicated it is getting closer to putting interest rates on hold.
Mr Langcake said the unemployment rate was expected to drift upwards over 2023 due to higher interest rates cooling demand.
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