The unemployment rate unexpectedly tumbled to 5.8 per cent in February, its lowest level since of the outbreak of the COVID-19 pandemic last year.
It followed a downwardly revised 6.3 per cent in January.
The jobless rate has trended lower since hitting a 22-year high of 7.5 per cent during the depths of the recession in July.
Employment also jumped by 88,700 in February when economists had expected a more modest 30,000 increase, and featured an 89,100 rise in full-time workers, which was only partly offset by a small fall in part-time employment.
"The strong employment growth this month saw employment rise above 13 million people and was 4000 people higher than March 2020," Australian Bureau of Statistics head of labour statistics Bjorn Jarvis said.
The jobless rate was still 0.6 percentage points above its March 2020 level at the start of the pandemic, leaving around 89,000 more people unemployed.
However, there are concerns that the end of the JobKeeper wage subsidy at the end of this month will result in renewed job losses.
BIS Oxford Economics chief economist Sarah Hunter said the end of JobKeeper will present some headwinds for the outlook.
"But broadly speaking, the labour market continues to outperform and the recovery shouldn't be derailed by the end of the scheme," Dr Hunter said.
However, a new report warns the good fortunes retailers enjoyed coming out of last year's recession may not last as government stimulus measures wind back.
Retail spending was one of the bright spots of the economy in the second half of 2020, which could spill over into the early stages of this year.
But Deloitte Access Economics says a return to more normal spending could mean 2020's windfalls are temporary.
Retail spending ended 2020 on a strong note, with volumes surging 6.4 per cent over the year to December quarter.
But Deloitte expects spending will slow during the second half this year to be down 0.4 per cent for 2021.
"Our fiscal stimulus tap has been turned down to a drip, meaning less money for households to spend," Deloitte Access Economics partner David Rumbens said.
He says while households are expected to spend up given the good news on vaccines and fewer restrictions, this is more likely to be on travel and hospitality.
