Prime Minister Scott Morrison urged Australians not to be defeatist, at the same time as he acknowledged the unemployment rate is far worse than offical figures show and made worse still by the Victorian virus surge.
"Let's not allow our heads to go down. Let's keep our heads up. Let's keep going forward," Mr Morrison said after the release of the June employment data.
"The lift in participation rate is very welcome, that means more people went back out there," he said. "And that's why it's important to keep going forward and not put our heads down and not adopt a defeatist attitude. That's not the Australian way."
The figures showed that after 872,000 jobs were lost in April and May, 211,000 people were back in work in June - a return of almost one-quarter of the jobs stripped out earlier.
The increase, though, was all in part-time work, with 249,000 part-time jobs returned to the economy, a result that economists interpreted as a return to jobs in cafe, restaurants and retail.
But full-time employment went backwards in June, with another 38,000 full-time jobs lost. This was interpreted as the recession shifting to industries beyond those directly impacted, such as construction.
More than 1 million Australians are still working fewer hours or no hours at all, while not being officially counted as unemployed.
At the peak in April, while businesses were largely closed, 1.8 million people were working fewer hours than usual or zero hours. By June, that number was 1.15 million, an improvement of 400,000 since May and more than 600,000 since April, the Australian Bureau of Statistics figures show.
Of those "underemployed", about 230,000 had no work at all in June and 920,000 worked fewer hours than normal.
On top of that, another 69,000 people joined the unemployment queue, bringing the number of unemployed to 992,300. Most of those were not counted in the labour force in May because they weren't working but weren't officially looking for work.
Mr Morrison said while the impact of the Victorian lockdown would not show until the July data, the numbers for June showed there was hope. Even though people had fewer hours of work, more were in jobs.
"The Australian economy is fighting back," he said.
But the Victorian outbreak was a big setback and worse than he hoped.
"I think that is fairly self-evident," he said, while urging Australians to "lift our heads and keep looking forward".
There are half-a-million fewer Australians in jobs in June than in June last year - 310,000 fewer in full-time jobs.
The official unemployment rate has increased from 7.1 per cent in May to 7.4 per cent as people start looking or work again, although once people who don't have jobs but aren't officially looking for work are included, the number was put at more like 10 per cent.
Young people are still far worse off, with an official unemployment rate for 15-24 year olds of 16.4 per cent, up from 16.0 per cent in May. But young people still moved back into work faster than others, with 102,000 more 15-24 year olds in work in June than May.
The data comes as Mr Morrison announced his new JobMaker package of money to subsidise apprenticeships and training programs. The government has massively extended its subsidy of apprentice wages, and will now pay half of apprentice wages for businesses with up to 200 staff.
The subsidy, costing up to $28,000 per year per apprentice, is expected to help pay 180,000 apprentices and cost the government an extra $1.5 billion.
It comes just a week before Treasurer Josh Frydenberg is due to deliver a mini-budget, setting out stimulus plans beyond September.
Deloitte Access Economics principal Chris Richardson said the figures were "good news but old news", supplanted by the Victorian lockdown which meant that while jobs were probably increasing in other parts of the country in July, they were falling fast in Victoria.
That left the government delivering its mini-budget on a tricky date, he said, but there was no doubt the Victorian situation had changed the July 23 announcement, with the government set to continue pouring money into supporting the economy.
"Your policies can be perfect on Monday and rather less than perfect by Friday, so under those circumstances the last safety net, the final bit of sticky tape, has to be as strong as possible," Mr Richardson said.
The JobSeeker unemployment benefit, now at $1100 a fortnight after the government doubled it with the crisis, was becoming increasingly important.
"As time passes, $1 of JobKeeper becomes less effective and a $1 of JobSeeker becomes more effective. If a cafe is not going to reopen, you're just kind of sticky taping a job into place and that doesn't really help anybody."
Commonwealth Bank economist Gareth Aird said it was a lot easier to regain the first quarter of lost jobs than the remaining three quarters - and the job would be made still more difficult by the Victorian shutdown. June had been expected to make the turning point, but the virus resurgence meant the improvement would stall.
The ACT saw the nation's biggest jump in unemployment up from 4.1 per cent in May to 5.1 per cent in June - but still has the lowest unemployment rate in the country, held up by the large public sector workforce. The ACT also had a big jump in the participation rate, indicating the higher unemployment figure is driven by more people back in the workforce looking for a job.
Sign up for our newsletter to stay up to date.