Australian employment surged by 38,900 in May to beat all expectations, another sign of economic resilience that sent the local dollar up sharply and forced the market to further scale back expectations of aggressive rate cuts.

Today's data showed the unemployment rate rose as expected to 5.1 per cent from a revised 5.0 per cent, but only because of a sharp rise in the participation rate as more people went looking for work.

The jump in jobs blew away forecasts of a 5,000 fall, and all the gains came in full-time employment, which rose 46,100.

"It does seem an extraordinary set of numbers," said Michael Blythe, chief economist at Commonwealth Bank.

"The economy is probably in better shape than we are all willing to admit."

The Australian dollar climbed around three-quarters of a cent on the upbeat data to a peak of $0.9967, its highest since mid-May.

The jobs growth will be a welcome relief for the Reserve Bank of Australia (RBA), which earlier this week cut rates for a second month running, in part to support domestic sentiment amid a darkening global outlook.

The data also came just a day after figures showed the economy grew far faster than anyone suspected in the first quarter of the year, a result that helps explain the resilience of the labour market in recent months.

The current jobless rate of 5.1 per cent compares favourably with 8.2 per cent in the United States and the UK, 7.3 per cent in Canada and 11.0 per cent in the European Union