Shares on the ASX have had their best day since late November, as the heavyweight sectors and dollar were boosted by better employment and budget reports.

The S&P/ASX200 benchmark index closed higher by 77.5 points, or 1.16 per cent, to 6756.7 on Thursday, after mixed results in US trade.

It is the highest closing position for the ASX200 since February 25.

The All Ordinaries closed better by 83.4 points, or 1.21 per cent, to 7000.1.

The materials sector, which includes miners, added 1.6 per cent as iron ore prices remained above $US150 a tonne.

Financials climbed 1.08 per cent.

Investor optimism was helped by the unemployment rate falling to 6.8 per cent in November as a larger-than-expected 90,000 people joined the workforce.

Economists had forecast a 40,000 rise in employment, and the jobless rate remaining at October’s level of seven per cent.

A stronger than expected recovery from the COVID-19 recession has helped to wipe billions of dollars off the federal budget deficit.

The mid-year economic review shows the deficit for the 2020/21 financial year is now forecast to be $197.7 billion, rather than the $213.7 billion announced in October’s delayed budget.

The Aussie dollar improved and was buying 75.94 US cents at 1623 AEDT, higher from 75.58 US cents at Wednesday’s close.