Australia’s unemployment rate jumps to 4.5% with markets slashing chance of more interest rate hikes

Australia’s unemployment rate has jumped to 4.5% in April to reach the highest in about four. half years, amid fears rising interest rates and the global oil crisis will smash economic growth.

The surprise rise in unemployment will provide the Reserve Bank with more reason to hold off on a fourth rate hike at its next meeting in June. as financial markets slashed the chance of more interest rate rises this year.

The number of employed people unexpectedly fell by 18,600 in the month – the first decline this year – dragging the jobless rate up from 4.3%. according to the Australian Bureau of Statistics.

The chief economist at Betashares, David Bassanese, said there were “tentative signs suggesting the labour market is buckling”.

“Of course, whether the RBA raises rates again depends on inflation outcomes. whether the labour market weakness evident in April was merely a quirky one-off or part of a softening trend,” Bassanese said.

The chance of a rate hike at the next meeting on 7 June dropped to just 3%. from 13% before the release of the employment figures, according to financial market pricing provided by Westpac.

Traders also slashed the probability of an interest rate rise by 12 August to 40%, from over 70%.

Taylor Nugent, a NAB senior economist said he still anticipated another rate hike,. that the timing had been pushed back from June to August.

“There is now less urgency for the RBA board to lean more firmly against inflation risks,” Nugent said.

The jobless measure remains below pre-pandemic levels of more than 5%,. has been drifting higher since a near 50-year low of 3.4% in late 2022.

Last week’s budget forecast that unemployment would peak at 4.5% by the middle of this year. although Treasury warned that it could reach 5% in a scenario where a more severe Middle East crisis pushes oil prices towards $US200 a barrel.

Ryan Wells, an economist at Westpac, said the lift in the unemployment rate could be an early sign of the impending economic shock associated with the US-Israel war on Iran. this year’s three interest rate rises.

“It [the shock] will still take time to fully work its way through household spending, into profit margins, to eventually impact decisions around investment. staffing further down the line,” Wells said.

The ABS data also showed the first drop in female employment since August 2025. as a higher than usual number of Australians remained unemployed in April.

The Australian share market extended early gains on the release of the data as investors factored in a smaller chance of future interest rate hikes. The benchmark S&P/ASX 200 index ended the day 1.5% higher to record its best session in six weeks.