Australia’s Unemployment Rate rose to 4.1% in April, compared with the expectations of 3.9% and the previous figure of 3.8%, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday.
Furthermore, the Australian Employment Change arrived at 38.5K in April from -6.6K in March, compared with the consensus forecast of 23.7K.
The participation rate in Australia increased to 66.7% in April, compared to 66.6% in March. Meanwhile, Full-Time Employment decreased by 6.1K in the same period from 26.6K in the previous reading. The Part-Time Employment increased by 44.6K in april versus -32.5K prior.
Bjorn Jarvis, ABS head of labour statistics, said with the key highlights noted below
"With employment rising by around 38,000 people and the number of unemployed growing by 30,000 people, the unemployment rate rose to 4.1 per cent and the participation rate increased to 66.7 per cent."
"The 30,000 people increase in unemployment reflected more people without jobs available and looking for work, and also more people than usual indicating that they had a job that they were waiting to start in.”
"The increases in both employment and unemployment in April saw the participation rate up by 0.1 percentage point to 66.7 per cent in April. It has been relatively high, above 66.5 per cent, since March 2023.”
"The employment-to-population ratio remained steady at 64.0 per cent in April, indicating that recent employment growth is broadly keeping pace with population growth. This suggests that the labour market remains tight, though less tight than late 2022 and early 2023.”
AUD/USD reaction to the Australia Employment report
The Australian Dollar attracts some sellers in an immediate reaction to the Australia Employment report. The AUD/USD pair is trading at 0.6690, losing 0.04% on the day.
Australian Dollar price this week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -1.07% | -1.33% | -0.53% | -1.27% | -1.22% | -1.72% | -0.76% | |
| EUR | 1.06% | -0.26% | 0.55% | -0.20% | -0.15% | -0.64% | 0.32% | |
| GBP | 1.31% | 0.25% | 0.80% | 0.06% | 0.12% | -0.40% | 0.57% | |
| CAD | 0.53% | -0.55% | -0.81% | -0.75% | -0.68% | -1.19% | -0.22% | |
| AUD | 1.25% | 0.19% | -0.06% | 0.74% | 0.05% | -0.44% | 0.51% | |
| JPY | 1.20% | 0.13% | -0.11% | 0.69% | -0.04% | -0.52% | 0.46% | |
| NZD | 1.69% | 0.63% | 0.37% | 1.17% | 0.44% | 0.49% | 0.95% | |
| CHF | 0.75% | -0.31% | -0.56% | 0.24% | -0.50% | -0.45% | -0.95% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
This section below was published at 21:30 GMT on Thursday as a preview of the Australia Employment report
- The Australian Unemployment Rate is expected to continue rising in April.
- Employment Change could post a modest improvement after March’s slump.
- AUD/USD could run past 0.6700 on an upbeat employment report.
Australia will publish the April employment report on Thursday at 1:30 GMT. The Australian Bureau of Statistics (ABS) is expected to announce the country added 23.7K new job positions in the month, after losing 6.6K in March. The Unemployment Rate is foreseen to increase to 3.9% after ticking higher to 3.8% previously.
It is worth remembering that Australia reports the monthly Employment Change split into full-time and part-time positions. Generally speaking, full-time jobs imply working 38 hours per week or more and usually include additional benefits, but they mostly represent consistent income. On the other hand, part-time employment generally means higher hourly rates but lacks consistency and benefits. That’s why the economy prefers full-time jobs.
In March, the economy added 27.9K full-time jobs and lost 34.5 part-time ones, for a net loss of 6.6K employees. At the same time, the Unemployment Rate rose from 3.7% in February to 3.8%, while the Participation Rate declined 0.1 percentage points to 66.6%. The discouraging report was widely anticipated following an outstanding February report, and the Australian Dollar (AUD) actually appreciated against the US Dollar (USD) right after the release.
Australian unemployment rate expected to keep rising in April
Market analysts anticipate the Australian Unemployment Rate increased to 3.9% in April after rising to 3.8% in March. As previously noted, the country is expected to have created roughly 24K new job positions.
Tight labor market conditions have been an issue for central banks around the world for most of 2023, as it poses an upward risk to inflation. The problem has extended throughout the first quarter of 2024, with some tepid signs of loosening conditions falling short of being enough to spook concerns.
Australia is no exception to this, as the sector has remained relatively strong. The Reserve Bank of Australia (RBA) met in early May, and as widely anticipated, policymakers kept the Official Cash Rate (OCR) unchanged at 4.35%. Governor Michele Bullock delivered a speech following the decision and noted that policymakers “must” be vigilant on inflation risks and said they would adjust policy as needed. However, Bullock added she does not think they will necessarily have to tighten again, but refused to commit to rate cuts.
The tepid March employment report followed a strong one in February, keeping the labor market off the RBA’s radar. On the contrary, inflation remains the main concern. The Australian Bureau of Statistics (ABS) publishes the Consumer Price Index (CPI) quarterly. According to the latest release, the CPI rose 1.0% in the first quarter of the year, higher than the previous 0.6%. On a positive note, the report showed that over the twelve months to the March quarter, the CPI rose 3.6%, easing from the 4.1% posted in the twelve months to December.
At this point, market participants anticipate the first interest-rate reduction could happen in March 2025.
When will the Australian employment report be released, and how could it affect AUD/USD?
The ABS will publish the April employment report early on Thursday. As previously stated, Australia is expected to have created 23.7K new jobs in the month, while the Unemployment Rate is foreseen at 3.9%. The Participation Rate was reported at 66.6% previously.
With that in mind, a solid employment report will likely cool further hopes for a soon-to-come rate cut and provide near-term support to the AUD. An extremely poor outcome could spell trouble for the Aussie, although the broad US Dollar’s weakness will likely prevail after the dust settles. Furthermore, it would take more than one dismal report to consider the labor market is loosening, which means it would hardly impact RBA’s future monetary policy decisions.
From a technical perspective, Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair surged to fresh four-month highs following the release of the United States (US) Consumer Price Index (CPI) and trades in the 0.6660 region ahead of the event. The pair struggles to extend its upward momentum as selling interest has rejected advances around the current price zone since early March. Persistent buying interest could push AUD/USD towards 0.6700, while beyond the latter, resistance could be found at 0.6730 and 0.6770. A dismal report, on the contrary, may temporarily weigh on the Aussie. Near-term support comes at 0.6600, followed by the 0.6550-0.6560 price zone. Bear in mind, bulls will likely take their chances on intraday slides.”
Bednarik adds: “AUD/USD gains are directly linked to persistent US Dollar’s weakness, amid diminished hopes the Federal Reserve (Fed) will trim interest rates in the upcoming months. With that in mind, the pair is set to resume its pre-release trend once speculative interest digests the employment figures.”
Economic Indicator
Employment Change s.a.
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. The statistic is adjusted to remove the influence of seasonal trends. Generally speaking, a rise in Employment Change has positive implications for consumer spending, stimulates economic growth, and is bullish for the Australian Dollar (AUD). A low reading, on the other hand, is seen as bearish.
Read more.Next release: Thu May 16, 2024 01:30
Frequency: Monthly
Consensus: 23.7K
Previous: -6.6K
Source: Australian Bureau of Statistics
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0850 after US data
EUR/USD struggles to gain traction but manages to hold above 1.0850 in the second half of the day on Tuesday. Although the lower-than-expected US Job Openings data for April limits the US Dollar's gains, the cautious market stance doesn't allow the pair to push higher.
GBP/USD stays in red below 1.2800 despite weak US data
GBP/USD remains under bearish pressure and trades deep in the red slightly above 1.2750 after touching its highest level in over two months above 1.2800 earlier in the day. The US Dollar benefits from risk-aversion despite weak JOLTS Job Openings data and weighs on the pair.
Gold under pressure around $2,325.00
Gold continues to push lower and trades below $2,320 on Tuesday, erasing Monday's gains in the process. The renewed US Dollar strength amid souring market mood drags XAU/USD lower, even though US Treasury bond yields struggle to gain traction.
Cardano price flashes buy signal, but will ADA bulls cooperate? Premium
Cardano (ADA) price is at a reversal zone but there are other factors at play that could prevent it from flipping bullish. Investors need to pay close attention to immediate levels to determine ADA’s bias.
ECB cuts pave the way to higher term risk premia
Historically, before QE, higher policy rates have corresponded to lower term premia and incoming rate cuts would therefore be conducive to higher premia. Going forward, QT should have a large enough impact to revive the term risk premium back to positive territory.