Australia’s unemployment rate held steady in April, as 89,000 people found employment — much stronger jobs growth than had been forecast.
The unemployment rate remained at 4.1 per cent last month, the same level as in March, in seasonally adjusted terms.
The rise in employment was larger for females, up 65,000 (0.9 per cent), while male employment was up 24,000 (0.3 per cent).
Female employment growth was mainly in full-time workers, which rose 42,000 (1.1 per cent) in April. Female part-time workers rose by 23,000 (0.8 per cent).
The ABS data shows employment has grown by 390,000 people over the year (+2.7 per cent), an annual growth rate that is much higher than the population growth rate for people aged 15 years and over (+2.1 per cent).
The strong growth in employment saw the employment-to-population ratio lift by 0.3 percentage points to 64.4 per cent in April, which is just below the record high of 64.5 per cent recorded in January.
With the addition of 6,000 officially unemployed people (actively looking for work), the labour force swelled by 95,000 people in April, lifting the participation rate by 0.3 percentage points, to 67.1 per cent.
Low unemployment rate, falling inflation, and interest rate cuts
In trend terms (which looks through seasonal noise in the data) the unemployment rate was steady in April, at 4.1 per cent.
It’s been sitting within a relatively narrow range of 3.9 per cent and 4.1 per cent for the past 17 months.
The low unemployment rate has coincided with falling inflation, with headline inflation falling from 4.1 per cent to 2.4 per cent (in annual terms) in the same period.
Economists say the strong jobs report is unlikely to prevent the Reserve Bank from cutting interest rates next week, but it could mean the RBA will be less aggressive with rate cuts later this year.
“Strong employment gains, following a few months of weaker results, reminds us that the Australian job market remains healthy,” said Callam Pickering, Asia Pacific economist at job site Indeed.
“Forward-looking measures of labour demand, such as Indeed job postings, continue to suggest that labour demand remains quite strong, supporting employment growth,” he said.
Tony Sycamore from IG said after the robust jobs report was released, the Australian interest rate market marginally reduced the probability of a 0.25 percentage point RBA rate cut next week from 90 per cent to about an 80 per cent chance.
He said markets were now only pricing in around 0.73 percentage points of RBA rate cuts between now and the end of this year too, which is “significantly less” than the 1.0 percentage point cut priced in on Monday morning.
ANZ economists Aaron Luk and Adelaide Timbrell said the resilient labour market, along with Wednesday’s stronger wage data, may add to discussions about whether to cut or hold the cash rate next week.
They said the outsized surge in employment — by 89,000 people, against market expectations of 22,500 people — also suggested that the increase in jobs may be “more noise than signal,” adding to the volatility in employment numbers in 2025 so far.
In fact, they said hours worked was flat last month, despite the strong growth in employment, and that’s a more stable indicator of economic activity.
However, they still expect the RBA to cut rates by 0.25 percentage points next week, they said.
What about ‘full employment’?
Independent economist Saul Eslake said the strong employment numbers were significant.
He said they raised the question of where the “full employment” level of unemployment actually was.
He said the unemployment rate had been hovering around 4 per cent since January last year, but inflation had been consistently falling and wage growth in the private sector had also slowed down.
“That’s half of a percentage point below the Reserve Bank’s and Treasury’s estimate of the so-called ‘non-inflation-accelerating rate of unemployment’ (or NAIRU),” he wrote on LinkedIn.
“[That’s] economist-speak for the unemployment rate that is consistent with a rate of wage inflation that is in turn consistent with consumer price inflation remaining stable at 2.5 per cent (the mid-point of the RBA’s 2-3 per cent target band).
“Yet, despite that, wages growth in the private sector has slowed from 4.2 per cent in the second half of 2023, to 3.3 per cent over the year to the March quarter of this year (the up-tick in overall wages growth to 3.4 per cent, reported yesterday, was entirely due to pay increases in the public sector, very little of which flows on into increases in consumer prices).
“So, almost certainly, the official estimates of the ‘NAIRU’ were too high — it is probably closer to 4 per cent than 4.5 per cent.
“Although we still need to see a pick up in productivity growth if 3.5 per cent wages growth is to be consistent with 2.5 per cent inflation,” he wrote.
