Australia’s jobs market weakens as unemployment hits highest level since 2021 – Firstpost

Australia’s unemployment rate unexpectedly climbed to 4.5 per cent in April, the highest level since late 2021, after nearly 19,000 jobs disappeared from the economy, strengthening the case for the Reserve Bank of Australia to keep interest rates on hold amid signs the labour market is beginning to cool.

Data released on Thursday by the Australian Bureau of Statistics showed employment fell by 18,600 jobs in April, sharply undershooting economists’ expectations for a gain of 15,000 positions. The unemployment rate rose from 4.3 per cent in March, while the number of unemployed Australians increased by 33,000 during the month.

The weaker-than-expected figures prompted investors to scale back expectations of another near-term interest rate hike, with markets pricing only a small chance of a move at the RBA’s June meeting.

The participation rate — which measures the share of Australians either working or seeking work — slipped 0.1 percentage points to 66.7 per cent, while full-time employment dropped by 10,700 positions after a strong rise in March.

Financial markets reacted quickly to the softer labour data. The Australian dollar weakened 0.2 per cent to $0.7136, while yields on three-year government bonds tumbled 13.8 basis points to 4.568 per cent.

Money markets had priced in roughly a 15 per cent chance of a rate hike at the central bank’s June meeting before the data release, although investors still expect borrowing costs to rise again before the end of the year.

The RBA has already lifted interest rates three times this year, taking the cash rate to 4.35 per cent as policymakers attempt to curb stubborn inflation fuelled partly by higher global energy costs linked to geopolitical tensions in West Asia.

Minutes from the central bank’s May meeting, released earlier this week, showed most board members still viewed controlling inflation as the top priority, even as concerns about slowing economic growth and employment risks intensified.

Australia’s annual inflation rate accelerated to 4.6 per cent in March, remaining well above the RBA’s target range of 2 per cent to 3 per cent.

Signs of slowing momentum in the economy have also begun to emerge elsewhere.

A survey by ANZ showed Australian job advertisements declined 0.8 per cent in April, marking a second consecutive monthly fall. Separately, a business survey by National Australia Bank found its employment index dropped sharply to +1 in April from +6 in the previous month.

Meanwhile, Commonwealth Bank this week downgraded its forecast for Australian economic growth by the end of 2026 to 1.6 per cent from 1.9 per cent, while also raising its peak unemployment forecast to 4.6 per cent from 4.4 per cent.

Economists said the latest labour market figures suggest higher borrowing costs may finally be dampening hiring demand, potentially giving the RBA room to pause before considering any further tightening.