Australia’s unemployment rate jumps to 4.5% in ‘tentative signs labour market is buckling’ | Unemployment
Australia’s unemployment rate jumped to 4.5% in April, the highest level in nearly four-and-a-half years, amid fears that rising interest rates and the global oil crisis will crush economic growth.
According to the Australian Bureau of Statistics, the number of people employed fell unexpectedly to 18,600 in the month; This was the first decline of the year, with the unemployment rate rising from 4.3%.
The surprise rise in unemployment will give the central bank more reason to delay a fourth interest rate hike at its next meeting in June as central bank officials balance concerns about a rise in inflation and a slowing economy.
Betashares chief economist David Bassanese said there were “tentative signs that the labor market is collapsing.”
“Of course, whether the RBA will raise interest rates again depends on inflation results and whether the weakness in the labor market seen in April is just a one-off interesting situation or part of a softening trend,” Bassanese said.
The unemployment measure remains below pre-pandemic levels of more than 5%, but has been on the rise since a nearly 50-year low of 3.4% in late 2022.
Last week’s budget predicted unemployment would peak at 4.5% in the middle of this year; but the Treasury has warned that this rate could reach 5% in a scenario where a more severe Middle East crisis would push oil prices towards US$200 per barrel.
ABS data also showed the first fall in female employment since August 2025, as more Australians than usual became unemployed in April.
The Australian share market extended gains as investors factored in lower chances of future interest rate hikes as the data was released. The benchmark S&P/ASX 200 index was traded up 1.7% in afternoon trading.
Financial markets were pricing in a very low probability of a rate hike on June 16, and an 80% chance of a rate hike at the end of the next RBA meeting on August 11.
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