For the first time since before the start of the country's long recession, the number of people in work has topped 23 million.
In total, 23.06 million people were registered as working in July, a figure which has not been so high since October 2008, when it reached 23.08 million.
According to Istat, that figure rose by 59,000 or 0.3 percent from June, and represented a 1.3 percent rise since July 2016.
Prime Minister Paolo Gentiloni said on Twitter that the figures showed a positive recovery, but added that there was "still a lot to be done" in order to tackle the country's unemployment crisis.
He also credited his predecessor Matteo Renzi's Jobs Act for the increase. The 2014 Jobs Act was a controversial labour market reform which made it easier for companies to hire and fire employees, with the aim of cutting down of so-called 'precarious' contracts and encouraging hiring.
Since it came into force in February 2014, almost a million jobs have been created, Renzi said on Thursday.
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The positive results of July's Istat figures were also hailed by Economy Minister Pier Carlo Padoan, President Sergio Mattarella, and in Brussels, with the EU Commissioner for Economic Affairs Pierre Moscovici telling Ansa that the rise was "good news".
Overall, the unemployment rate rose by 0.1 percent from June to 11.3 percent, while the youth unemployment rate had risen by 0.3 percent from June, reaching 35.5 percent.
Youth unemployment hit its lowest level in five years in May, when it fell to 35.2 percent, however this was largely due to an increase in people classed as 'inactive' or not currently job-seeking, for example because they are students.
However, July saw a sharp drop in the number of 'inactive' people, hitting a historic low of 34.4 percent, which explains how both the employment rate and the unemployment rate saw an increase.