Australia’s Unemployment Rate Rises to 3.7%: What You Need to Know
According to official estimates from the Australian Bureau of Statistics (ABS), Australia’s unemployment rate has risen to 3.7% after an estimated 4,300 jobs were lost last month. This news comes as a surprise to economists who were expecting the unemployment rate to remain steady at 3.5%, with the creation of 25,000 jobs.
Unemployment Rate and Employment Figures
The number of officially unemployed people rose in April by 18,000, and the participation rate decreased slightly by 0.1 percentage points to 66.7%. ABS head of labour statistics Bjorn Jarvis said that the small fall in employment last month followed an average monthly increase of 39,000 jobs in the first three months of the year. Despite the small fall in employment last month, the monthly hours worked increased a little by 2.6%.
Economists’ Predictions
Some economists say that the labour market is showing signs of cooling, but the rise in hours worked shows there’s also some momentum left in the economy. Adhijit Surya, from Capital Economics, says it’s likely the unemployment rate will now overshoot the Reserve Bank’s average forecast for the second-quarter, of 3.6%. He said that yesterday’s data showing wage growth remained sluggish in the first three months of this year should be enough to keep the RBA from lifting interest rates any higher.
Other economists said we’ll need a few more months of data to confirm if we’re now experiencing a sustained slowdown in economic activity. Warren Hogan, an Australian macroeconomist, said the data seemed to show “first hints” of slackening in our labour markets.
What Does This Mean for the Future?
Against this backdrop, we’re sticking to our forecast that the unemployment rate will reach 4.4% by year-end, above the 4% the RBA is currently expecting,” he said. Cooling household spending and strong labour supply growth will likely put further pressure on the unemployment rate over the period ahead.
The data seem to show that participation in the labour market has topped out near record high levels and isn’t getting any higher. The “employment-to-population ratio,” which provides a measure of employment relative to the size of the working-age population (aged 15 and over), shows how much demand there is for workers generally from the pool of people who are old enough to be working. It hit a record high in June last year, and in trend terms has been ever-so-slowly edging downwards since October.
Conclusion
The rise in unemployment rate is a cause for concern for the Australian economy. While some economists predict that the unemployment rate will continue to rise, others believe that we need more data to confirm if we’re now experiencing a sustained slowdown in economic activity. Regardless, it’s clear that the Reserve Bank should feel less pressure to raise rates after seeing these data. The central bank has previously spoken about wanting to preserve the job gains it made during the pandemic, so if that remains the case, then it should prefer to hold the cash rate steady for now and assess if further rate rises are necessary.
Source: abc.net.au
