According to labor force data for January published by the Australian Bureau of Statistics (ABS) on Thursday, the unemployment rate rose from 3.5 percent in December to 3.7 percent.
The number of unemployed people in Australia increased by 21,900 between December and January, with that of employment decreasing by around 11,000.
Economists had forecast that employment would rise, with the rate remaining steady at 3.5 percent.
Responding to the data, Treasurer Jim Chalmers said the figures were consistent with budget estimates and unemployment could continue to rise.
"Now, the unemployment rate today was a bit softer than it has been, but it is still around historic lows," he said in a press conference in Canberra.
"We have been expecting an uptick in the unemployment rate as the economy slows a bit, as the obvious consequence of a slowing global economy mixed with the impact of interest rate rises here in our own economy."
The total number of hours worked by Australians fell 2.1 percent between December and January.
Bjorn Jarvis, head of labor statistics at the ABS, said the drop could be attributed to a high number of workers taking leave in January.
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