Queensland Treasurer Cameron Dick has tentatively welcomed a fall in the state's unemployment rate but warned that the situation can still get worse.
The state's unemployment rate fell from 8.8 per cent in July to 7.5 per cent in August, giving Queensland highest proportion of jobless workers in the country after South Australia.
The number of employed people in Queensland rose by 18,000 to 2.44 million, while the number of unemployed dropped by 36,900 to 197,500,
However, the participation rate fell to 63.6 per cent from 64.1 per cent, meaning more people gave up looking for work.
Treasurer Cameron Dick says the data is encouraging but volatile, with the state government's economic outlook forecasting unemployment to hit 9 per cent by the December quarter of 2020.
"The times ahead will be challenging for us, the road ahead will still be rough and things may very well get worse before they get better," he said.
Opposition treasury spokesman Tim Mander said the government was "flying blind" through the pandemic with more than 120,000 jobs lost since February.
He said while close to 200,000 people were out of work, a fall in the participation rate, or people looking for work, showed the state was bucking the national trend.
"Being pipped by South Australia for the unemployment wooden spoon is nothing for Labor to be proud of," Mr Mander said.
"Labor are flying blind through the biggest economic crisis in almost a century."
Mr Dick said the federal government's JobKeeper scheme was also distorting the data because anyone receiving the payment was not counted as being unemployed.
He called on federal counterpart Josh Frydenberg to seriously assess the timing of winding back Jobkeeper as unemployment rates could sharply rise.
But the Queensland treasurer is optimistic the state government's skills and training initiatives and funding programs for employers to take on trainees and apprentices will help arrest any slump.
Mr Dick suggested that people facing job losses in hard-hit sectors like tourism and aviation may be able to make the transition into new jobs in different industries.
"That may very well be the case for those workers, so that's our projection that we will bottom out this year, but by the middle of next year we will see an increase," Mr Dick said.