Australia’s unemployment rate jumped to 4.5% in April, the highest level in about four and half years, as the number of employed people fell by 18,600 in the first decline this year.
The jobless rate rose from 4.3%, and the labour-market report quickly shifted expectations for the Reserve Bank’s next move. The chance of a rate hike at the 7 June meeting dropped to 3% from 13%, while the probability of an increase by 12 August was cut to 40% from over 70%.
For households and investors, the reading landed as a warning that the economy is cooling more quickly than many had expected. The Australian share market still ended the day 1.5% higher, with the S&P/ASX 200 index posting its best session in six weeks as traders recalibrated the outlook for borrowing costs.
David Bassanese said there were “tentative signs suggesting the labour market is buckling”, a phrase that captured the shift in mood after months of resilience. Taylor Nugent said he still anticipated another rate hike, but the timing had been pushed back from June to August, adding that there was now less urgency for the RBA board to lean more firmly against inflation risks.
The central bank had already raised rates three times this year, and the latest data suggests those increases are beginning to bite. Australia’s unemployment rate has been drifting higher since a near 50-year low of 3.4% in late 2022, though it remains below pre-pandemic levels of more than 5%.
The federal budget had forecast unemployment would peak at 4.5% by the middle of this year, and April’s reading brought that projection into view sooner than expected. Treasury has also warned unemployment could reach 5% if a severe Middle East crisis pushed oil prices towards $US200 a barrel, a reminder that the labour market is being squeezed by both higher rates and outside shocks.
Ryan Wells said the effects would not be immediate, saying the shock would still take time to work through household spending, profit margins, and eventually decisions on investment and staffing. That is the central point in April’s data: the slowdown is no longer theoretical. It is now showing up in pay packets, hiring plans and the odds attached to the next Reserve Bank meeting.
