Yesterday's release of the June jobless figure for Wollongong, Shellharbour and Kiama coincided with BlueScope Steel's announcement about the restart of its No 5 blast furnace at the Port Kembla.

But Illawarra Regional Information Service executive director Simon Pomfret warned a major reason for the jobless rate decline was the large drop in the number of people looking for work - a major factor in determining the unemployment rate.

The reduction in the participation rate - from 60.1 per cent to 55.7 per cent in a month - was more dramatic than at any time in recent history.

"It shows some people have given up looking for work," Mr Pomfret said.

He said a close analysis of the figures showed that between May and June the Illawarra actually lost 5800 full-time jobs and 1300 part-time jobs.

The region's rate is still significantly higher than the unrevised figures for NSW (6.3 per cent) and Australia (5.7 per cent).

Throsby MP Jennie George said the improved rate was evidence the Federal Government's stimulus initiatives were working, but acknowledged the rate did not take into account a reduction in worker hours.

"I think employers are doing their best to hang onto their workers," she said.

The unemployment figures follow the release of Illawarra Business Chamber survey results this week which found the region's businesses are still doing it tough, but are more optimistic about the future than three months ago.