The Australian unemployment rate fell to 4.9 per cent in March, returning to December's two-year low, with employment growth recovering quickly after the Queensland floods.

Total employment rose by a seasonally adjusted 37,800 to 11.457 million in the month after jobs were lost in February, the Australian Bureau of Statistics (ABS) said on Thursday.

The median forecast for the unemployment rate for March was steady at five per cent per cent, with 20,000 jobs added for the month, an AAP survey of 15 economists shows.

Commonwealth Bank senior economist John Peters said it was a beautiful set of numbers.

"It's unequivocally a very good number, it fits with the way we're looking at the economy with growth picking up, turbo charged by the commodity boom.

"It's certainly boosting employment growth, which we think will remain strong in the coming year," he said.

The March participation rate was 65.8 per cent, up from an unrevised 65.7 per cent in February.

ICAP senior economist Adam Carr said the data showed the labour market was back on track.

"I think what we saw over the December and February period was a weather distorted lull in jobs growth," Mr Carr said.

"We're seeing March data now (and) the distortion has abated and we're back on track, recording strong jobs (growth)."

If the figures continue to show a tight labour market in the coming months, Mr Carr expected the central bank to raise the cash rate by June.

"A lot depends on upcoming CPI and other data ... but the economy is strong, the underlying momentum is strong and today's jobs data shows that."

Commonwealth Bank's Mr Peters said the fall in unemployment may bring capacity constraints and, consequently, inflationary pressures.

"We're now into the zone when the Reserve Bank of Australia starts to worry about how strengthening labour market conditions will flow through to wage pressures.

"I guess the bottom line for us is it bolsters our view that there will be another 100 basis points in monetary policy tightening over the next 12 months.

"It'll take the cash rate to 5.75 per cent as the RBA tries to ensure that inflation pressures don't build too much," he said.

The RBA last increased the overnight cash rate by 25 basis points in November to 4.75 per cent.