Australia's unemployment rate has increased from 3.5 per cent to 3.7 per cent according to last month's figures, in seasonally adjusted terms.

The number of employed people fell by 11,500, according to the Bureau of Statistics.

It was the second-consecutive monthly decline in employment.

The head of labour statistics at the ABS, Bjorn Jarvis, said the number of people officially unemployed increased in January as well, by 21,900.

However, he said, much of that rise in unemployment was driven by a seasonal fluctuation.

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Duration: 8 minutes 44 seconds8m

He said there was a larger-than-usual rise in the number of unemployed people who have a job to go to in coming weeks.

"January is the most seasonal time of the year in the Australian labour market, with people leaving jobs but also getting ready to start new jobs or return from leave," Mr Jarvis said.

"This January, we saw more people than usual with a job indicating they were starting or returning to work later in the month," he said.

Reserve Bank will keep hiking rates

The rise in the unemployment comes as the Reserve Bank of Australia signals its intention to keep hiking interest rates to squeeze inflation out of the economy.

The RBA has been lifting interest rates aggressively since May last year, lifting the cash rate target from 0.1 per cent to 3.35 per cent so far.

This week, RBA governor Philip Lowe acknowledged rates were now at contractionary levels, and you could see that because property prices have been falling and home building has declined.

According to the RBA's central forecast, Dr Lowe said the unemployment rate would probably have to rise to 4.5 per cent by next year to ensure that inflation falls to 3 per cent in coming years.

He said that would be a great thing for Australia because stubbornly high inflation is socially and economically destructive.

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Is this a turning point?

David Bassanese, the chief economist for BetaShares, said the economy may be starting to "finally buckle" under the weight of the RBA's rate rises.

He said this softer-than-expected jobs report, combined with recent weak retail sales and a slump in consumer confidence, suggested we may have hit a turning point.

"As such, it suggests the RBA may not need to raise rates too aggressively in coming months," he said.

"With the RBA's own estimates suggesting between 50-75 per cent of the increase in inflation reflects supply factors, and with inflation expectations still largely contained, the economy simply does not yet deserve to go into recession to get inflation under control."

Mr Bassanese said the RBA was obviously trying for a "soft landing" where consumer spending and inflation slowed moderately without unemployment rising too much, but that was not guaranteed.

"Of course, the RBA could make a policy mistake and overly tighten and nudge the economy toward recession," he said.

"That said, I still think the risk of a policy-induced recession is fairly low, as the RBA could easily about-face and slash rates quickly if need be. 

"Despite current budget deficit concerns, the federal government would also likely not be shy in providing support."