Investing.com — Australia’s job market unexpectedly contracted in April, data showed on Thursday, while unemployment rose amid some cooling in economic activity, although a high number of vacancies showed that the labor space was still running red hot. The total number of employed people in the country fell by 4,300 people in April to a seasonally adjusted 13.9 million, data from the Australian Bureau of Statistics (ABS) showed. The reading was weaker than expectations for a rise of 25,000 people, and also showed that growth in the space was cooling after a 53,000 surge in March. This saw the unemployment rate rise to 3.7% from 3.5% in the prior month.
While the total number of hours worked increased in April, a fewer number of people worked on account of the Easter holidays. But it also indicated that the labor shortage in Australia was to some extent being met by people working more hours, the ABS said in a release. The reading reflects some cooling in the Australian jobs market after the space enjoyed a post-COVID boom over the past year. A potential cooling in the jobs market also comes as Australian interest rates trend at decade highs, after the Reserve Bank hiked rates to curb high inflation.
The cooling jobs reading also comes as data on Wednesday showed that Australian wage growth slowed slightly in the first quarter of 2023. The RBA has warned that employment is likely to cool further this year as rates remain high or possibly increase further. Weakness in the jobs market also gives the RBA lesser headroom to keep raising rates further.
The Australian dollar sank 0.4% on Thursday following this notion. Still, the RBA is likely to seek more signs of cooling in the labor market as it tightens policy this year. The bank had unexpectedly hiked interest rates earlier in May, and warned that it could continue doing so in the near-term. While unemployment increased in April, it still remained close to a 50-year low touched last year. Robust employment has been one of the few bright spots in the Australian economy, as the country grapples with high interest rates and elevated inflation.