Growth in state and local government job numbers is surging ahead of "tepid" federal public sector employment figures in a new economic snapshot.
Local councils are growing fastest while state governments added 52,000 workers to their headcounts last year, according to the Australian Bureau of Statistics.
Public sector employment hit 2 million nationally, despite slow growth in the federal public sector. The national wages bill for public servants reached $166.9 billion.
Local government grew 3.4 per cent and state government 3.3 per cent, while the education, health and public administration sectors expanded their workforce.
BIS Oxford Economics chief economist Sarah Hunter said the public sector's expansion outpaced growth in the working age population.
Governments grew their share of national employment in the last year, although the federal public sector's growth was "tepid", she said.
The public sector expanded as private sector employment growth stagnated.
"Generally speaking, public sector employment has driven total employment over the last year," Dr Hunter said.
The federal workforce reached 242,000, a modest 0.5 per cent increase compared to the previous year.
Victoria added nearly 17,000 public servants to its state government headcount, growing at 4.5 per cent, leading NSW (2.5 per cent) and Queensland (3 per cent) in public sector employment growth.
The ACT government's workforce grew by 1000 staff but has stayed largely unchanged in the last five years, the bureau's figures show.
Industry Super chief economist Stephen Anthony said state public sector growth on the east coast of Australia was driving expansion in government employment.
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Combined with a relaxed state public sector wages environment, the increase was cause for concern, he said.
The National Disability Insurance Scheme roll-out had also increased public sector employee numbers.
"That combined with what's occurring at state governments, particularly in the south-east of the country, has supported outcomes in the broader economy.
"That has really deflected from the underlying state of those economies," Mr Anthony said.
Committee for Economic Development of Australia chief economist Jarrod Ball said a recent survey had shown health care and social assistance were priorities among Australians.
Public sector growth reflected these expectations about service levels, and state government efforts to meet them.
"A lot of it does relate to the services that people are demanding and some of the cost pressure at the state level," he said.
Mr Ball said public sector employment growth had slightly lagged national population growth over the last decade.