The Australian Bureau of Statistics said employment stood at 9.535 million in May - of this, full time employment rose 37,200 and part-time employment fell 8200.

The workforce participation rate was steady at 64.0 per cent.

In April, employment declined by 14,300, while the unemployment rate stood at 6.1 per cent.

Economists were expecting some rebound today, with the median of forecasts centring on an adjusted rise of 10,000.

Unemployment was predicted to climb by a point to 6.2 per cent, which analysts said was an argument in favour of the interest rate cut factored into money market rates at the moment.

Economists said forecasts were tricky due the uncertainty of the month to month data, because of the bureau's changed survey sample.

Analysts said other surveys were suggesting employment growth would soften over the next six to nine months.

However, after three consecutive monthly falls in employment totalling 69,400, a bounce in May was a fair call.

The Australian economy continued to send mixed signals this week, with economists predicting a mild slowdown before the end of the year caused by a sluggish world economy.

A National Australia Bank monthly survey showed business conditions remained strong but exporters such as manufacturers, along with tourism, were beginning to lag domestic powerhouses like the construction industry.

At the same time, the number of jobs advertised in newspapers slumped more than 5 per cent on the same period last year but business expectations reached a 15-month high.

Economists attempting to find their way through what has been described as a "data fog" generally believe the economy is heading into a slowdown, the severity of which will depend on when, or if, the long-awaited recovery in global markets kicks in.

This week, NAB chief economist Alan Oster said the bank's monthly business survey showed forward orders were set to drop significantly, pointing to an imminent slowdown, with the business conditions index edging up one point to seven points in May.

"The survey suggests that fundamentally the economy remains robust but is in the process of slowing," Oster said. "The big risks are with the possibility of a worse outcome on global growth than currently envisaged."

A monthly ANZ survey of newspaper job advertisements was also open to interpretation, showing a gain of 8.1 per cent in May on a month-by-month basis but down 5.5 per cent from a year ago.

ANZ chief economist Saul Eslake said the overall trend in job advertisments was at its lowest level since October 2001.

"These results point to further moderation in the pace of employment growth," he said. "Weaker jobs growth could see the unemployment rate drift up towards 6.5 per cent in the next few months."

However, business leaders were at their most bullish since February last year, according to a Dun and Bradstreet Australia poll of executives which found capital spending intentions in the September quarter at a three-year high.

Dun and Bradstreet chief executive Christine Christian said there had been a significant turnaround in sentiment among executives.

"The strong Aussie dollar, the end of the war in Iraq, easing drought conditions and low fuel prices are all contributing to the recent surge in optimism," she said.

The offical rural forecaster ABARE was also looking on the brighter side, saying Australia's worst drought on record is over and upcoming harvests set to double.

Reserve Bank of Australia governor Ian Macfarlane last week lowered his estimate for economic growth in calender 2003 by 0.75 percentage points to three per cent and warned Australia's recent strong economic performance did not make it immune to international problems.

March quarter GDP figures show Australia's annual growth rate at 2.9 per cent compared to 4.2 per cent at the same time last year, with the government expecting it to slip further in the June quarter because of SARS' impact on the tourism industry.

Yesterday, an official measure of future employment showed a rise marginally for June, signalling any slowing in employment growth in the second half of the year was likely to be moderate.

The Department of Employment and Workplace Relations (DEWR) Leading Indicator of Employment for June rose to 0.055 up from 0.054 in May.

"Following five consecutive decreases in the series since November 2002, the indicator rose, albeit marginally, for the third consecutive month in June 2003," DEWR said. "The recent small rises in the series suggest, at this stage, that any slowing in the rate of employment growth during mid- to late-2003 could be moderate."

Employment Minister Tony Abbott said today's figures showed the underlying strength in the jobs market, despite their monthly variability.

"They show the continuing underlying strength in the Australian labour market in the face of the ongoing international uncertainty and the impact of the drought," Mr Abbott said.

He said over the last 12 months, employment had increased by 234,600, or 2.5 per cent, allowing for seasonal factors.

AAP, AFP