Australian shares closed the week lower, as a strong labor market lowered bets of interest rate cuts.

The S&P/ASX 200 fell 0.5% or 42.5 points to close at 8,666.9.

Applications for US employment benefits fell to 217,000, missing expectations, Bloomberg reported.

"The likelihood of faster easing has faded as both political dynamics and economic indicators reinforce a more cautious Fed stance," said Hebe Chen, an analyst at Vantage Markets in Sydney.

On the domestic front, Westpac Banking (ASX:WBC, NZE:WBC) believes the Reserve Bank of Australia's (RBA) understanding of productivity and supply-side dynamics is shifting, with further internal analysis expected ahead of the August policy meeting and statement on monetary policy, the bank said in a report.

Business conditions among Australia's small and medium-sized enterprises (SMEs) weakened in the second quarter, while confidence improved slightly, according to a survey by National Australia Bank (ASX:NAB).

In company news, Newmont (ASX:NEM) reported late Thursday that its second-quarter adjusted net income rose to $1.43 per diluted share from $0.72 a year earlier. Shares of the company rose 4% at market close.

Whitehaven Coal's (ASX:WHC) managed run-of-mine coal production rose to nearly 10.6 million tonnes in the fiscal fourth quarter from 9.7 million tonnes in the year-earlier period. Shares of the company fell 1% at market close.

Lastly, Shares of Macquarie Group (ASX:MQG) were flat with a slight negative tilt at market close after it said in a late Thursday filing that it received its "first strike" from shareholders at its annual general meeting on Thursday, against the company's remuneration report on executive pay.