The jump in the jobless rate to a 12-year high is not a good look for the federal government.
Whether or not the surge to 6.4 per cent is due to a new survey method adopted by the Australian Bureau of Statistics (ABS), it comes when the government is struggling to sell a tough budget.
Economists had expected the unemployment rate to remain at six per cent in July.
It exceeds the 6.25 per cent rate Treasurer Joe Hockey pencilled in the budget for the 2014/15 financial year, a level he said he inherited from the previous Labor government.
Treasurer Joe Hockey said the results were disappointing, but the government had a plan to lift employment through new infrastructure projects, mature-age wage subsidies and tighter "learn or earn" eligibility for the dole.
Employment Minister Eric Abetz pointed the finger at the opposition for holding up budget measures in the Senate.
"Literally hundreds of thousands of our fellow Australians ... have been denied a job because of the recalcitrance of (Opposition Leader Bill) Shorten and the Greens," he told reporters in Wollongong, NSW.
Labor's employment spokesman, Brendan O'Connor, noted Australia now had a higher unemployment rate than the US for the first time since 2007.
"There's no doubt that (the government's) unfair budget has hurt business and consumer confidence," Mr O'Connor said.
ACTU president Ged Kearney agreed, saying the budget was not just a political failure but an economic failure. Acting Greens leader Adam Bandt described it as a "wrecking ball".
The figures also somewhat contradict comments by Reserve Bank governor Glenn Stevens this week that the outlook for the labour market had improved, albeit conceding it would probably be some time before unemployment declined consistently.
The RBA will release its quarterly monetary policy statement on Friday.
David Lee, a director at business consultants Pitcher Partners, does not believe the jobs data will affect interest rates.
"The latest (unemployment) rise is likely to quieten anyone who has been suggesting the RBA may raise interest rates to curb inflation," Mr Lee told AAP.
The number of people in employment fell by 300 in July, when a 12,000 increase was forecast.
Full-time employment rose by 14,500, but this was offset by a 14,800 drop in part-time workers.
"There is no question that the economy went through a lull period following the federal budget, but it has since lifted," Commonwealth Securities economist Savanth Sebastian said.
The ABS does not believe changes to its survey methodology had a significant bearing on the outcome.
Even so, the figures will do little to soothe Mr Hockey's growing frustration as he tries to get his budget accepted.
Australian Chamber of Commerce and Industry chief executive Kate Carnell urged opposition parties and independents to work constructively with the government.
Shadow treasurer Chris Bowen advised the treasurer to "just stop whingeing".