Australia’s job market delivered surprising weakness in April, with employment numbers dropping while unemployment surged to levels not seen since late 2021, potentially indicating the labor market may be cooling enough to prevent immediate interest rate increases.
The disappointing employment figures caused financial markets to reduce expectations for a rate increase next month to just 10%, down from 20% previously, after the central bank implemented three consecutive rate hikes this year in efforts to control inflation. Prospects for an August rate adjustment are now considered unlikely.
Australia’s currency declined 0.2% to $0.7136, while three-year government bond yields dropped 13.8 basis points to 4.568%, continuing earlier downward movement.
Data released by the Australian Bureau of Statistics revealed net employment decreased by 18,600 positions in April compared to March, which saw a revised increase of 23,300 jobs. This result fell significantly short of market predictions calling for a 15,000 job gain. Full-time positions declined by 10,700 following a substantial increase in the prior month.
Unemployment climbed to 4.5%, marking the highest level since November 2021, while economists had anticipated the rate would remain steady at 4.3%. The participation rate decreased slightly to 66.7%. Despite the employment decline, hours worked increased a robust 0.8%.
“Compared to what we usually see in April, more people remained unemployed this month,” said Sean Crick, ABS head of labour statistics.
“A drop in female employment drove the overall fall in employment … This is the first fall in female employment since August 2025.”
The central bank has implemented three interest rate increases this year, bringing rates to 4.35% to address a war-related global energy crisis, completely reversing policy easing measures from the previous year. Annual inflation rose to 4.6% in March, significantly exceeding the target range of 2%-3%.
The employment market has demonstrated remarkable strength, leading the central bank board to determine that additional loosening would be necessary to address the deteriorating inflation outlook.
An ANZ survey indicated Australian job advertisements decreased 0.8% in April, marking the second consecutive month of declines, while a National Australia Bank business survey showed its employment index dropped significantly to just +1 in April from +6.
