Australia’s labour market weakened in April, with the Australian Bureau of Statistics (ABS) reporting that employment fell by 18,600 people while the unemployment rate rose from 4.3% to 4.5%, the highest level in more than four years. The result was weaker than expected, as economists had forecast minor employment growth, and suggests higher interest rates are beginning to slow economic activity more noticeably.
The decline in employment was spread across both full-time and part-time work and was accompanied by a slight easing in labour force participation. While unemployment remains relatively low by historical standards, the April figures suggest that the exceptionally tight labour market is beginning to soften. The weaker outcome is significant as the RBA has consistently argued that slower demand, weaker employment conditions and softer wage growth are necessary to bring inflation back toward target.
Financial markets interpreted the April data as reducing the likelihood of another immediate rate rise. Following the release, government bond yields and the Australian dollar fell as investors scaled back expectations of further tightening in June. The weaker jobs figures, combined with slowing credit growth, may allow the RBA to pause and assess the economy over the coming months.
However, inflation risks remain elevated. Oil prices remain high, core inflation is still above the RBA’s target range, and supply disruptions continue to place upward pressure on costs. As a result, while markets now expect the RBA to hold rates steady in the near term, at least one additional rate increase later in 2026 remains likely.
The April ABS labour force data suggests the Australian economy is beginning to lose momentum under the weight of higher interest rates and global uncertainty. While the weaker labour market may reduce pressure for an immediate rate rise, inflation remains persistent enough that further tightening later this year cannot be ruled out.
Source: Australian Bureau of Statistics, Labour Force, Australia, May 2026.