Jobs market still strong but signs it’s cooling off

By Poppy Johnston in Canberra

JOBS data has come in a little softer than expected and has likely diluted the case for another interest rate hike. 

The jobless rate rose to 3.7 per cent from 3.5 per cent last month, ticking up against expectations it would hold firm.

About 4300 jobs disappeared from the economy, the latest Australian Bureau of Statistics data shows, with the participation rate sinking 0.1 percentage point to 66.7 per cent.

“With employment dropping by around 4000 people and the number of unemployed increasing by 18,000 people, the unemployment rate rose to 3.7 per cent,” ABS head of labour statistics Bjorn Jarvis said.

Mr Jarvis said the modest fall in employment followed several big jumps, with an average of about 39,000 people finding jobs each month during the first quarter of 2023.

ANZ senior economist Adelaide Timbrell said the indication that fewer people were in jobs in April than in March would be a welcome sign for the Reserve Bank.

“As much as the Reserve Bank doesn’t want to see people losing their jobs at an alarming rate, there has been a real shortage of labour and this is a signal that perhaps, at least for this month, there is a tiny bit of easing in a very tight labour market,” she told ABC News.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said the labour market was expected to soften, but the ABS monthly jobs report was known to swing around.

“Whether today’s data are the start of that process or just typical volatility will be a key question at the upcoming RBA meeting,” he said.

He said the jobs report slightly weakened the case for a rate hike in June but the labour market remained very tight, making the June decision a “very close call”.

The labour market is expected to keep cooling off with signs of weakness already emerging as the number of unfilled roles starts to shrink and firms start to slow up on hiring.

But Ms Timbrell said there were still a lot of jobs to go around, with 52.5 per cent more jobs advertised in April 2023 compared to the same month before the pandemic in 2019.

“We will continue to see employment growth – there is very strong population, it’s a pretty resilient economy, it’s more just it’s not going to be the boom that we saw last year,” she said.

Treasury foresees the jobless rate drifting up to 4.5 per cent in 2024/25 before sinking back to 4.25 by 2026/27.

Treasurer Jim Chalmers said rising unemployment was a consequence of higher interest rates and global uncertainty.

“We’ve expected the unemployment rate to tick up a little bit it as it has today, but it’s still remarkably low given what’s coming at us from around the world,” he told reporters in Perth.