Australia’s unemployment rate climbed to 4.5% in April, reaching its highest level in about four and a half years as the labour market showed fresh signs of strain, according to multiple media sources.
New figures from the Australian Bureau of Statistics revealed employment unexpectedly fell by 18,600 during the month, marking the first decline this year. The jobless rate rose from 4.3%, adding to concerns that rising interest rates and global economic pressures are starting to weigh on growth.
The weaker-than-expected data has sharply reduced expectations of another near-term interest rate rise from the Reserve Bank of Australia.
Rate outlook
Financial markets moved quickly after the employment figures were released. The probability of a June rate hike dropped sharply, while expectations for further tightening later this year were also scaled back.
Markets now see only limited chances of another increase in borrowing costs in 2026 after the central bank already delivered three consecutive rate rises earlier this year.
The latest numbers could give the Reserve Bank more reason to pause as households continue to face pressure from high living costs and global uncertainty linked to oil prices and tensions in the Middle East.
Economic concerns
The unemployment rate remains below pre-pandemic levels above 5%, but it has steadily increased since hitting a near 50-year low of 3.4% in late 2022.
Treasury forecasts released in last week’s federal budget predicted unemployment would peak at 4.5% by the middle of the year. However, officials warned it could rise to 5% if a worsening Middle East crisis pushes oil prices towards US$200 a barrel.
Ryan Wells, an economist at Westpac, said the labour market may only be beginning to feel the impact of recent shocks.
“It [the shock] will still take time to fully work its way through household spending, into profit margins, to eventually impact decisions around investment and staffing further down the line,” Wells said.
Expert warnings
David Bassanese, chief economist at Betashares, said there were “tentative signs suggesting the labour market is buckling”.
“Of course, whether the RBA raises rates again depends on inflation outcomes and whether the labour market weakness evident in April was merely a quirky one-off or part of a softening trend,” Bassanese said.
Taylor Nugent, senior economist at NAB, said another rate rise was still possible later this year, though the timing may shift.
“There is now less urgency for the RBA board to lean more firmly against inflation risks,” Nugent said.
Market reaction
The softer employment figures lifted investor sentiment on the Australian share market as traders priced in a lower risk of aggressive rate hikes.
The benchmark S&P/ASX 200 closed 1.5% higher, recording its strongest session in six weeks.
The ABS data also showed female employment fell for the first time since August 2025, while a higher-than-usual number of Australians remained unemployed through April.