The jobless rate remained at a four-year high last month, with the economy shedding 10,200 jobs in a soft reading that has supported the Reserve Bank's interest rate cut.
The unemployment rate was unchanged at 5.7 per cent in July because fewer people looked for work.
The dollar lost half a cent on the jobs report, falling to US89.73¢ before rebounding on stronger Chinese trade data. It was buying US90.84¢ late Thursday.
The data underscored a slowdown in the economy amid a shift away from mining-led growth. While the report was soft, the figures were not overly weak and reflected the Reserve Bank's outlook, economists said.
A gradual deterioration in the unemployment rate was expected, with growth in jobs unlikely to keep pace with the rising population. The employment-to-population ratio dropped to a seasonally adjusted 61.4 per cent last month.
A softening jobs market was expected to keep the door open for further rate cuts.
"In trend terms, total employment growth is basically zero. It's only 1000 a month, so it's pretty flat [and] full-time employment is falling in trend terms," ANZ senior economist Justin Fabo said.
Full-time positions fell 6700 while part-time jobs shrank 3500, reversing most of the gains in June.
The figures came two days after one of the forward indicators for employment, the ANZ's job advertisement series, found job ads had fallen for the fifth straight month last month.
The data also followed the RBA's easing of the cash rate to a historic low of 2.5 per cent, with its board acknowledging the recent rise in unemployment.
A rise in total hours worked could be a reflection of the political uncertainty surrounding the election and firms' cautiousness about hiring staff before then, economists said.
"Without a clear view about what the tax and regulatory environment will look like after the election, firms may have been more willing to boost hours rather than hire new staff," said HSBC's chief economist for Australia, Paul Bloxham.
The July figures pointed to a shift in jobs between mining and non-mining states. Interest rate-sensitive states such as NSW and Victoria were benefiting from easier monetary policy, a falling dollar and signs of a US revival, Commonwealth Bank senior economist Michael Workman said.
In Western Australia and Queensland, employment growth was expected to slow as the resources investment boom peaked.
The unemployment rate rose 0.2 per cent to 5.6 per cent for NSW, and eased slightly to 5.7 per cent in Victoria. Queensland's jobless rate fell to 5.9 per cent and was steady at 4.6 per cent in WA.