Australia unemployment rate hits 4.5% as labor market shows signs of weakness

Australia’s unemployment rate rose to 4.5% in April, the highest in approximately four and a half years, amid concerns that rising interest rates and a global oil crisis will stifle economic growth.

The number of employed people unexpectedly fell by 18,600 in April — the first decline this year — pushing the jobless rate up from 4.3%, the Australian Bureau of Statistics reported.

The surprise increase in unemployment gives the Reserve Bank of Australia more reason to hold off on a fourth rate hike at its June meeting, as officials balance worries about spiking inflation with a slowing economy.

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.

The jobless measure remains below pre-pandemic levels of more than 5%, but has been drifting higher since a near 50-year low of 3.4% in late 2022.

Last week’s federal budget forecast that unemployment would peak at 4.5% by mid-2025, though Treasury warned it could reach 5% if a more severe Middle East crisis pushes oil prices toward $200 a barrel.

The ABS data also showed the first drop in female employment since August 2025, as a higher-than-usual number of Australians remained unemployed in April.

The Australian share market extended gains on the data release as investors factored in a smaller likelihood of future interest rate hikes. The benchmark S&P/ASX 200 index traded 1.7% higher in early afternoon trade.

Financial markets priced in only a very small chance of a rate hike on June 16 and an 80% probability of one by the end of the following Reserve Bank meeting on August 11.