Australia had a phenomenal year for employment in 2017, with the largest absolute increase in jobs on record, but wages remained stagnant and underemployment high, according to economists.

The Bureau of Statistics has released its employment data for December, completing the picture for jobs growth in 2017.

The data show 403,100 jobs were created last year, in seasonally adjusted terms, as the economy recorded its 15th consecutive monthly gain in employment, matching the record set in June 1995 when Australia was recovering from the early 1990s recession.

The majority of the new jobs were full-time positions (303,400 positions, worth 75%).

By the end of the year, the strength of the jobs market was encouraging more people back into the labour force to actively look for work, leading the participation rate in December to jump from 65.5% to 65.7%.

The increase in the participation rate meant the official unemployment rate actually increased slightly in December, from 5.4% to 5.5%, but economists say that increase should not be interpreted negatively.

“These are exceptionally good figures,” the independent economist Saul Eslake said. “The absolute increase in jobs over the course of 2017 was the largest on record. In percentage terms, at 3.4%, it’s the biggest since 1994.”

However, despite the strong employment figures in 2017, the anaemic pace of wages growth is unlikely to pick up in 2018. That’s because the underemployment rate (8.3%) and underutilisation rate (13.7%) remain stubbornly high.

“With 5.5% unemployment, with what is still a considerable margin of underemployment on top of that, indicates there’s still a fair bit of slack in the labour market, so it would be a leap to say these figures mean an uptick in wages growth is just around the corner,” Eslake said.

“It’s certainly consistent with the idea that we shouldn’t see any further slowing in wages growth.”

The job creation in 2017 was driven heavily by two industries: healthcare and construction.

The JP Morgan economist Tom Kennedy has previously said the acceleration in employment and participation in the healthcare sector was the result of hiring and participation spillovers related to the rollout of the National Disability Insurance Scheme, while the construction industry benefited from home-building and government infrastructure cycles.

Kennedy said the rollout of the NDIS has had a noticeable impact on women’s participation, given the healthcare and social assistance sector is so female-dominated.

Bureau of Statistics figures show the participation rate for women is now at a record high of 60.4%, in trend terms.

Kennedy posits that since an increasing number of NDIS providers are taking more of the care load, it has allowed informal care-givers (who are typically women) who had previously left the labour force to care for family members to begin re-entering the labour force in increasing numbers to look for paid employment.

Malcolm Turnbull was quick to trumpet the employment figures on Thursday, during his visit to Japan.

“What a great jobs number today,” Turnbull said. “This is the equal to the longest run of consecutive monthly jobs increases since 1978. The participation rate is at the highest level in seven years, and we’ve seen consumer confidence at the highest level since November 2013.

“So jobs and growth. A slogan in 2016, a big outcome this year.”

Brendan O’Connor, the shadow employment minister, said Turnbull may trumpet the employment numbers, but with 730,600 unemployed Australians, there are still 37,800 more people lining the unemployment queue than when the Abbott-Turnbull government was first elected.

“Labor notes that the unemployment rate at 5.5% is comparable to that at the peak of the global financial crisis,” he said.

“There are almost 1.1 million underemployed Australians looking for more work, but unable to find it. When coupled with the number of unemployed, it means there are more than 1.8 million Australians who are underutilised in the labour force.

“With insecure work, record low wages growth and skyrocketing cost of living pressures, Australians are feeling the pinch and Turnbull and his Liberals have failed to acknowledge these challenges, let alone come up with any policy initiatives to deal with them,” he said.

The Commonwealth Bank economist Gareth Aird said unemployment and underemployment ought to “grind lower” over the next 12 months, helping wages growth to gradually lift.

“This should put some mild upward pressure on inflation and inflation expectations,” Aird wrote to clients on Thursday.

“As such, a first rate rise since 2010 looks probable this year. Indeed, current market pricing implies a greater than 50% chance of a rate rise by August 2018.”