A drop in unemployment and a pat on the back from the International Monetary Fund (IMF) are welcome news indeed, says federal Treasurer Wayne Swan, who remains “optimistic” about the economy.

The jobless rate unexpectedly fell to 4.2 per cent in June, as the number of people employed bounced back sharply, Australian Bureau of Statistics data released today shows.

The good news coincided with an IMF consultation paper which warned inflation risks in Australia were on the upside, but approved a number of Rudd government policies.

Mr Swan was pleased with unemployment figures.

“Given the global credit crunch, given the global oil shock, these figures are very welcomed figures indeed,” Mr Swan told reporters in Sydney.

He also accepted the IMF analysis and warnings for Australia to hopefully head off higher inflation and corresponding interest rate rises.

“Those judgments from the International Monetary Fund are also very welcomed,” Mr Swan said.

The treasurer said the government’s first budget had been responsible and would help control inflation, but not hinder manageable economic growth.

He said the budget was designed to “put maximum downward pressure on inflation and therefore maximum downward pressures on interest rates”.

“That’s why the endorsement by the IMF today is very important.”

The IMF said the economic outlook was more uncertain than usual because of Australia’s “jump in commodity prices, sizeable immigration flows and the increase in state infrastructure spending”.

“These factors could offset the impact of weaker consumer and business confidence and support domestic demand. On inflation, the risks are clearly on the upside,” the IMF paper states.

Mr Swan remains optimistic with Australia’s economic prospects.

“I for one am optimistic about the future of the Australian economy,” he said.

“These figures today reflect that the Australian economy is continuing to grow.”

AAP