Unemployment jumps to 4.5 per cent in shock result
Updated . First published at
Australia's unemployment rate has risen to 4.5 per cent in April, surprising market watchers who largely expected the jobless rate to remain steady.
New data from the Australian Bureau of Statistics (ABS) showed that the number of employed people fell by 19,000 in April, while the number of unemployed people rose by 33,000.
The ASX200 rallied strongly soon after the result, as many suspect a weakening labour market would urge the RBA to hold or delay any further interest rate hikes.
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The jump in unemployment will likely factor into the RBA's next interest rate decision. Peter Rae
The figure of 4.5 per cent is the highest the unemployment rate has been since late 2021.
Sean Crick, ABS head of labour statistics, said the falls in employment were similar across both full-time and part-time roles.
"Compared to what we usually see in April, more people remained unemployed this month," he said.
"Both full-time and part-time employment fell, by 11,000 and 8000 people respectively."
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The number of employed people fell by almost 20,000 in April. Sitthixay Ditthavong
Harry McAuley, economist for Oxford Economics Australia, said while the war in Iran would be a factor, it would have to be a "lightning-fast response" from employers to be the primary contributor.
"It more likely reflects pre-war economic sentiment, compounded by the expected impacts of the oil crisis," McAuley said.
"We expect the unemployment rate to peak at 4.8 per cent in late 2027. A slowdown in private consumption and a tougher business environment should slow hiring.
"Business confidence has cratered under higher inputs and borrowing costs, which will flow through their hiring decisions."
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RBA governor Michelle Bullock has said the bank will closely watch both inflation and the labour market. Renee Nowytarger
Jobless rate to influence RBA
After delivering three consecutive interest rate hikes this calendar year, today's unemployment figures will likely lessen the sentiment the central bank will deliver a fourth.
Wee Khoon Chong, APAC macro strategist at BNY, said today's surprise result will make the RBA move slower in hiking rates.
"The recent uptrend in the unemployment rate points to further weakness ahead," he said.
"This, along with easing in May PMI manufacturing and services confidence, is likely to imply a more cautious pace of RBA tightening ahead. The market has pared back rate-hike expectations, pricing in around one additional 25bp hike by the end of the year.
"That said, overall labour market conditions remain relatively tight. In our view, today's jobs data is not sufficient to counter the upside inflationary impact."
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