Unemployment rate up to 4.5 per cent in April

Australia’s unemployment rate has increasedto an “ugly”4½-year high of 4.5 per cent in April.

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.

The overall increase puts unemployment at the highest figure since November 2021.

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.

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.”

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 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.

“ … leaving the RBA trapped between a labour market slowly cooling and inflation pressures still burning too hot for comfort,” Mr Jocum said.

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.

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.”