The jobless rate rose to 6.9 per cent in September, a smaller rise than expected, as the number of people employed fell by 29,500.
Economists had expected the unemployment rate to spike to 7.1 per cent after the surprise fall to 6.8 per cent in August.
Full-time employment fell by 20,100, while part-time employment decreased by 9400, Australian Bureau of Statistics data released on Thursday shows..
"The September data provides further insights into the labour market impacts from the stage four restrictions in Victoria," ABS head of labour statistics Bjorn Jarvis said.
"Employment in Victoria decreased by 36,000, following a fall of 37,000 in August."