Unemployment rate up to 4.5 per cent in April

Australia’s unemployment rate has increasedto an “ugly” 4.5 per cent in April, the highest rate since November 2021.

Released on Thursday, the latest monthly unemployment data shows unemployment increased by 0.2 percentage points, with 33,000 fewer people in work.

The rate of males out of work stayed flat at 4.6 per cent, but female unemployment rose 0.4 percentage points to 4.4 per cent.

Global X ETFs strategist, Marc Jocum, said the jobs data was grim.

“Australia’s labour market is beginning to look less like a fortress and more like a sandcastle slowly being eroded by rising economic tides,” he said.

“Corporate Australia increasingly feels stuck in a pressure cooker, with rising input costs and Middle East uncertainty turning up the heat, while proposed post-budget policy changes keep the lid shut on business confidence, hiring and investment decisions.”

The data would prove “uncomfortable and ugly” for the central bank, Mr Jocum said.

However, the survey period overlapping with Easter and school holidays injected some nuance, “potentially exaggerating some weakness”, he said.

“Markets are now expecting the RBA to largely sit on its hands in June while monitoring how inflation evolves, with August increasingly shaping as the next pivotal decision point for a potential rate hike if inflation numbers do not improve,” he said.

Treasurer Jim Chalmers said he would not give the Reserve Bank advice on interest rates based on the jobs data, but that the central bank would “obviously” take labour numbers into consideration.

“I’m not going to give free advice to the independent Reserve Bank. There are good reasons why treasurers don’t do that,” Mr Chalmers said on Thursday.

“We expected the unemployment rate to tick up a bit, that’s what we’ve seen today, even as it’s ticked down here in WA.”

The Australian Council of Trade Unions points the finger at Donald Trump and the Iranian oil shock as the force driving unemployment, calling for the RBA to hold interest rates next month.

ACTU assistant secretary, Liam O’Brien, said falling female work numbers were particularly concerning.

“The Reserve Bank must take its full employment mandate into account when it meets in June,” he said.

“It is part of their mandate to protect jobs and guard against inflation. Working people, and working women especially, are relying on the Reserve Bank to do its job and protect full employment.”

“We all remember what happened when they left interest rates too high for too long and working people were caught in the crosshairs then.”

Oxford Economics Australia economist Harry McAuley said the rise was likely not a response to the US-Iran conflict.

“Firms’ hiring decisions tend to lag economic shocks – this would be a lightning-fast response if it is purely a reaction to the ongoing US-Iran crisis,” he said.

“It more likely reflects pre-war economic sentiment, compounded by the expected impacts of the oil crisis,” he 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.”

BDO chief economist Anders Magnusson said the figures showed the labour market was easing.

“This will provide some comfort to the Reserve Bank that demand in the economy is starting to soften, alongside a drop in employment of more than 18,000 people.

“While the drop in employment provides some comfort, an increase in hours worked suggests a nuanced story where the labour market is not cooling as quickly as the headline figures imply,” Mr Magnusson said.

The figures reflected a “modest” labour market response to the energy crisis, he said, but it was unclear if that response reflected domestic conditions and the global uncertainty.

“The RBA had been looking for some increase in unemployment as evidence that recent interest rate hikes are working to slow demand,” Mr Magnusson said.

“The RBA will now turn its attention to inflation and whether it is easing quickly enough to justify holding or reducing rates.”

The number of hours Australians are working continues to grow, rising 0.8 per cent in seasonally adjusted terms. Workers clocked an extra 15.8 million hours last month compared to March.

Nationally, Queensland had the highest relative number of people exit the workforce, with unemployment rising 0.5 percentage points to 4.2 per cent.

Unemployment in NSW and South Australia was up 0.2 points, Tasmania went up 0.3, Victoria was flat and Western Australia’s unemployment rate fell 0.1 points.

Running at its highest point since Melbourne and Sydney were in lockdowns in November 2021, the unemployment rise comes after two interest rate hikes in February and March this year but before the May hike filters through the economy.

Inflation is nearing a three-year high, with Thursday’s jobless data coming out above market expectations.

Australian Bureau of Statistics labour statistics head Sean Crick noted the data presented the first fall in female employment since August last year.

“Compared to what we usually see in April, more people remained unemployed this month.

“A drop in female employment drove the overall fall in employment, with full-time down 19,000 people, and part-time down 13,000 people.”

Broken down, the 0.2 point rise represents 19,000 fewer employed people but 33,000 extra people looking for work.

The data shows 18,600 jobs were lost, versus 15,000 created for the month.

Quarterly input costs for business are rising at 4.5 per cent – the highest since the inflation spike in 2022.

Capital Economics senior economist Abhijit Surya said the jobs data solidified chances of interest rates being held next month.

“The strong pick-up in Australia’s jobless rate in April makes it all but certain that the bank will leave rates on hold at 4.35 per cent at its June meeting,” Mr Surya said.

“However, with underlying inflation set to accelerate further, we’re not convinced the bank will call time on its tightening cycle. We still think there’s a case for it to lift its cash rate by an additional 25bp in Q3.”