Scott Morrison has described the loss of another 228,000 jobs as Australia's "dark times", warning there could be more bad news to come as a result of the coronavirus pandemic.
The jobless rate jumped to its highest level in nearly two decades to 7.1 per cent in May from an upwardly revised 6.4 per cent in April, as a further 227,700 people lost their job.
"The sad truth is these numbers are not surprising in these circumstances," the prime minister told reporters in Canberra on Thursday.
"We know there will be more in the months ahead."
May's monthly drop in the number of people employed is the second-largest on record after nearly 600,000 were sacked in April.
Another poor set of figures had been expected as a result of nationwide lockdowns to stem the spread of the virus.
"We're looking at around two years to get the economy back to what it was before COVID hit it," Mr Morrison said.
"These are our dark times, but I can see that ray of light, and I'm sure Australians can see that too."
Consumer confidence has recovered from the initial massive jolt in response to the outbreak as social distancing restrictions have eased, while business confidence is improving.
The Australian Bureau of Statistics data showed full-time employment had decreased by 89,100 in May while part-time employment dropped by 138,600.
The participation rate of people either in or seeking work fell by a further 0.7 per cent to 62.9 per cent, the lowest since 2001.
The jobless rate has been skewed by the JobKeeper wage subsidy, which has kept people in a job even if they are not actually working.
Many people have also pulled out of the labour market completely, so they are not registered as unemployed.
The ABS says if all the 835,000 who had lost their job in the past two months were still actively seeking work, the jobless rate would have been 11.3 per cent.
ANZ senior economist Felicity Emmett said as people return to the labour market seeking work then the measure of unemployment might rise more quickly as people become registered as unemployed.
Treasury secretary Steven Kennedy had previously forecast the unemployment reaching eight per cent by September.
Shadow treasurer Jim Chalmers said the prime minister is leaving too many people behind in this first recession in nearly 30 years.
"The unemployment queues are longer than they need to be because the Morrison government has bungled the JobKeeper program," Dr Chalmers told reporters in Canberra.
He said when the government announced JobKeeper would assist 3.5 million people rather than 6.5 million, Treasurer Josh Frydenberg said this was good news because the demand was not there.
"Well, that's news to 835,000 Australians," Dr Chalmers said.
Australian Associated Press