Australia's Unemployment Rises to 4.5%, Rate Hike Odds Drop

Australia's unemployment rate rose to 4.5% in April, reaching its highest level since November 2021, according to data from the Australian Bureau of Statistics (ABS). This unexpected increase has led markets to reduce the likelihood of an interest rate hike by the Reserve Bank of Australia (RBA), as reported by multiple sources including The Guardian and Reuters.

The jobless rate climbed from 4.3% in March, with a decrease in employment by 18,600 people, marking the first decline this year. This drop was driven partly by a fall in female employment, which has not been seen since August 2025. The participation rate eased slightly to 66.7%, while hours worked rose by 0.8%. Economists had anticipated a steady unemployment rate and an increase in jobs.

The rise in unemployment is likely to influence the RBA's decision on interest rates, with financial markets now pricing in only an 8% chance of a rate hike at its next meeting in June. The Australian dollar slipped by 0.5%, and three-year government bond yields fell by 17 basis points following the data release. Analysts suggest that this labor market weakness may validate the RBA's inclination to hold off on rate increases, raising the bar significantly for any future changes.

Despite April's disappointing figures, analysts note that the labor market has generally remained resilient. The RBA has raised interest rates three times this year to combat inflation, which jumped to 4.6% in March. However, past sharp increases in the unemployment rate have been revised away, and the RBA predicts the jobless rate may rise to 4.7% by mid-2028.