Unemployment is on the rise Down Under, a possible sign that the economy is starting to soften, and a potential brake on near-term interest rate hikes.
The latest jobs report, which was released by the Australian Bureau of Statistics (ABS) on Thursday, showed that the unemployment rate rose in April to 4.5%, up from 4.3% in March, in seasonally-adjusted terms.
The national participation rate, in seasonally-adjusted terms, continued its downward trend, falling to 66.7 in April, down from 66.8% in March, and 66.9% in February.
"Those headline numbers support our expectation that the Reserve Bank of Australia (RBA) board will pause at the June meeting," said Adam Boyton, head of Australian economics at ANZ.
Although, he added, that the RBA will likely continue to characterize the labour market as tight in the June post-meeting statement, supporting the need for higher interest rates.
Senior Economist Trent Saunders at Commonwealth Bank of Australia (CBA) agreed that the recent jobs report shows signs of a labour market easing. "However, it is too early to tell how much of the rise in the unemployment rate in April reflects noise, or a more fundamental shift in underlying momentum. But today’s data is a reminder that conditions are no longer tightening."
By state, Tasmania had the highest unemployment rate in seasonally-adjusted terms at 5%, followed by 4.8% in Victoria. Western Australia had the lowest unemployment levels at 4.1%, followed by Queensland and South Australia, which both had unemployment rates of 4.2%. New South Wales' unemployment rate was on par with the national average at 4.5%.
The nation's jobs report is just one of the many indicators helping determine the direction of interest rates, something that has been on the minds of mortgage holders and investors nationwide who have been under mounting pressure from higher interest rates. The Reserve Bank of Australia (RBA) has delivered three back-to-back rate hikes so far in 2026, taking the official cash rate (OCR) to 4.35%. And with inflation still elevated and global uncertainty persisting, further increases remain on the table.
Drivers include tensions in the Middle East and ongoing inflationary pressures. The RBA has been steadfast that it is working to keep the inflationary rate between 2% and 3%.
But inflation has yet to show signs of slowing since the start of the year. The latest consumer price index (CPI) revealed that both headline CPI and trimmed mean inflation are still elevated, with headline CPI surging to 4.6% in the year ending in February, and trimmed mean at 3.3%, both above the RBA's target range.
The conflict in the Middle East, which escalated in March, has done little to relieve price pressures. In fact, it has added to them, raising fuel and other commodity prices globally, including in Australia.
