* July employment +26,200, beating forecasts of +11,000
* Jobless rate dips to 5.7 pct, vs 5.8 pct expected
* But all the growth part-time, as full-time sinks 45,400
* A$ rises modestly, odds of rate cut little changed
By Wayne Cole
SYDNEY, Aug 18 (Reuters) - Australian employment sped past forecasts in July while the jobless rate unexpectedly dipped to 5.7 percent, yet the good news was tarnished by a steep fall in full-time work that pointed to lingering slack in the labour market.
Thursday's data from the Australian Bureau of Statistics showed 26,200 net new jobs were created in July, well above forecasts of an 11,000 gain. The jobless rate eased from 5.8 percent in June when analysts had looked for a steady outcome.
However, full-time positions actually sank 45,400, reversing all the gains made the month before and continuing a trend to part-time work that has been a feature of the year so far.
"Certainly the bottom line was encouraging with positive jobs growth and an inching down in the unemployment growth," said Michael Blythe, chief economist at CBA.
"But there's obviously still a degree of weakness in a heavy skew towards part-time employment," he added. "The implication is more about wages and inflation, and that slack points to inflation remaining low."
Currency investors reacted to the upbeat headline number and pushed the local dollar up a third of a U.S. cent to $0.7702 AUD=D4 . Yet debt markets were unfazed and continued to imply a 56 percent chance of another cut in rates by Christmas.
The Reserve Bank of Australia (RBA) lowered its cash rate a quarter point to an all time low of 1.5 percent earlier this month, in part because spare capacity in the labour market was depressing wages and inflation.
Figures out this week showed wage growth stayed stuck at a record low of 2.1 percent last quarter.
Minutes of the policy meeting showed board members talked a lot about how much slack there was and how long it might last - the conclusion being for a long time to come.
Members noted the underemployment rate, or those who would like to work more hours, has been stuck above 8.2 percent since mid-2014 even as the headline jobless rate declined.
RBA said its contacts with business suggested a broad range of corporations were seeking greater flexibility through part-time or casual work or temporary contracts, aiming to lift productivity and minimise labour costs.
All this meant spare capacity would linger for an extended period. Indeed, the RBA surprised many by predicting the jobless rate would fall only fractionally to 5.5 percent by late 2018, more than two years distant.
"Members noted that there continued to be considerable uncertainty about momentum in the domestic labour market and the extent to which domestic inflationary pressures would rise over the next few years," the minutes showed.
The mixed July jobs report will have done nothing to resolve that uncertainty.