Surprise jump in unemployment sharpens RBA’s trade-off

Jobs market loses momentum

Australia’s unemployment rate jumped to 4.5 per cent in April, with 18,600 jobs dropping out of the economy, according to the Australian Bureau of Statistics. 

Economists had expected the unemployment rate to hold at 4.3 per cent, with employment expected to grow by 15,000 jobs in April.

The number of unemployed people rose by 33,000, the bureau’s head of labour statistics Sean Crick said. 

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

“Despite the fall in employment this month, hours worked rose by 15.8 million hours. This meant that hours worked per person rose by 0.9 per cent.” 

The Reserve Bank had forecast earlier in May that the unemployment rate would average 4.2 per cent in the June quarter.

Female employment drives the fall 

The softer result was driven by a fall in female employment, the first since August 2025.

Female employment fell by 19,000 full-time roles and 13,000 part-time roles. 

Federal Employment Minister Amanda Rishworth said the figures showed some softening in the labour market against the backdrop of conflict in the Middle East.

“The figures demonstrate the ongoing resilience of the Australian labour market, because despite the uptick in the unemployment rate, it remains low by historical standards,” she said. 

Softer jobs market eases some RBA pressure

A softer labour market could help ease the Reserve Bank’s concerns that the economy is running beyond capacity, even as imported inflation pressures remain a risk. 

Money markets had been pricing in about a 15 per cent chance of a rate rise at the next Reserve Bank meeting in June and were fully pricing in one rate rise by November.

Minutes from the central bank’s meeting earlier in May, released on Tuesday, showed most board members still agreed that fighting inflation was the priority, even as risks to economic activity and employment were gathering. 

CBA sees growth slowing

Commonwealth Bank on Wednesday downgraded its economic growth forecast from 1.9 per cent to 1.6 per cent by the end of 2026 and lifted its peak unemployment forecast from 4.4 per cent to 4.6 per cent. 

“That leaves the RBA facing a difficult trade-off,” CBA economists Belinda Allen, Ashwin Clarke and Harry Ottley said in a research note.

“Inflation was already running too hot and will go higher from here. 

“At the same time, growth is likely to slow over coming months, which should bring demand more into line with supply and gradually reduce price pressures.”