Unemployment jumps
Employment fell -18,600, seasonally adjusted, in a much weaker than expected April labour force survey (taken in the early part of the month).
The 3-month average employment gain slowed to just +11,000, far below the increase in working age population and the labour force.
The number of unemployed persons, meanwhile, rose by +33,000 to 692,500 in April.
Arguably the only metric that really matters is the unemployment rate, and it surged a fair bit from a seasonally adjusted 4.3 per cent to 4½ per cent, to sit above the Reserve Bank's forecasts and at the highest level since 2021.
At the state level there appears to be some upwards pressure on unemployment in Victoria and Tasmania.
For now the national measures of underemployment and underutilisation don't look too bad.
However, there has been a sharp rise in youth unemployment, which often foreshadows a weakening economy, and is perhaps reflective of some AI disruption to entry level roles.
The growth in the population has also reaccelerated to the fastest pace since 2024, which naturally won't help with the concerning uptrend in unemployment.
The wrap
Overall, it was obviously a considerably weaker than expected result this month.
The statistics relate to a survey in early April, so can't yet have seen the effect from 25 basis point interest rate hikes in February, March, and May, as well as the crushed business sentiment related to the oil price shock (and any forthcoming consumer sentiment hit from the Federal Budget).
Australia's 3-year bond yield slunk back to under 4.6 per cent, from up at around 4.8 per cent earlier in the week, as markets assess that the interest rate hiking cycle might just already be done.
The implied terminal rate for this cycle has eased from 4.82 per cent earlier in the month to 4.6 per cent, with one further hike potentially priced in for Q3.
Source: Bloomberg, h/t Tony Sycamore, IG
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