Employers' fragile resistance to the financial crisis has finally buckled and more horror unemployment readings can be expected in coming months as the global recession engulfs Australia.
Official March job figures released on Thursday showed the unemployment rate surged to 5.7 per cent from 5.2 per cent as 34,700 workers joined the dole queue.
At its highest level since December 2003, the jobless rate surged well beyond what economists were expecting for March, and at a more rapid pace than government forecasts produced just a few months ago.
Deputy Prime Minister Julia Gillard, who also holds the employment portfolio, told reporters in Canberra the data was "sobering".
"Australia is battling a global recession that is resulting in falling growth and rising unemployment right around the world," Ms Gillard said.
"The worsening global recession means that unemployment here will inevitably be higher than previously forecast."
The government had forecast an unemployment rate of 5.5 per cent by June and 7.0 per cent by mid-2010.
Revised forecasts will be announced in the May 12 budget.
Opposition Leader Malcolm Turnbull said the "tragic" increase in unemployment was a sign that the government's economic policies had failed and that unemployment would be well above seven per cent.
"It demonstrates the government does not know where the economy is going," Mr Turnbull told reporters in Sydney.
Ms Gillard disagreed, saying the situation would have been worse without the initiatives the government had taken to deal with the economic problems, such as the two stimulus packages.
"Despite calls to do so, the Rudd government has not waited to cushion the impact of the global recession on Australian jobs, we have already acted," she said.
NSW was the worst hit, with the jobless rate jumping to 6.9 per cent from 5.9 per cent since February.
"NSW, as the economic engine room of the country, with the largest finance and services sector, was the first to feel the impact of the global financial crisis," NSW Treasurer Eric Roozendaal told reporters.
NSW Opposition Leader Barry O'Farrell said the latest figures showed 360 jobs were lost in NSW every day that Nathan Rees had been premier.
"These are disastrous figures for NSW," he told reporters.
"And it's made worse by a premier who pretends that he's creating jobs."
The Australian Chamber of Commerce and Industry (ACCI) warned it was only the first round of bad news, with more to come.
ACCI director of industry policy and economics Greg Evans said that prior to February, when the jobless rate had crawled up to 4.8 per cent, the labour market was demonstrating some resilience and business was able to maintain employment levels.
"It is now clear the contracting economy is certainly hitting home," he told reporters in Canberra.
"The non-farm sector of the economy is in recession and we would expect in the first half of 2009 a further contraction in the economy," Mr Evans said.
The jobless rate has lurched up 1.8 percentage points since the 34-year low of 3.9 per cent in February last year, an unprecedented acceleration in such a short timeframe, according to TD Securities senior strategist Annette Beacher.
She disagrees with some assessments that past interest rate action by the Reserve Bank of Australia (RBA) and fiscal stimulus by the government will be enough to restore economic growth.
"With only green shoots of recovery in the first home owner segment of the housing sector, more work needs to be done before anyone can be confident of a broader economic recovery," she said.
Financial markets are predicting an official cash rate of between two per cent and 2.25 per cent this year.
The central bank cut the cash rate to three per cent from 3.25 per cent this week.
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