The labour market has proved pretty resilient in the face of rising interest rates and global economic headwinds, but the April jobs report suggests the market could be starting to shift.
Roughly 4300 jobs disappeared from the economy over the month, with the jobless rate ticking up to 3.7 per cent from 3.5 per cent.
Another weak labour force reading for May, due on Thursday, would confirm the slowdown and suggest the April result was not just an isolated case.
Westpac economists put the surprise fall in employment down to a seasonal anomaly around the survey timing and Easter.
The April survey usually only captures a portion of the Easter holidays but this year was a rare occasion when it covered the entire period, which is usually associated with a weak month and a big bounce-back in May.
As such, the bank’s economists are expecting a “catch up” of 40,000 new jobs in the economy in May.
The Westpac team expect the unemployment rate to hold firm at 3.7 per cent, noting that labour demand remains robust for now but the forward view is less certain.
The jobs market may have passed its tightest point but an unemployment rate starting with a “three” is still indicative of a very tight jobs market.
While the Reserve Bank is trying to return too-high inflation to target and keeping as many people employed as possible, it is hoping to see the jobs market loosen up.
That’s because its interest rate rises are supposed to take some heat out of the economy and take pressure off prices.