Australia’s unemployment rate has risen to 4.5% in April, surprising market analysts who had expected it to remain unchanged.

New data from the Australian Bureau of Statistics (ABS) showed that employment fell by 19,000 people during the month, while unemployment increased by 33,000.

This pushed the jobless rate to its highest level since late 2021.

ABS Head of Labour Statistics Sean Crick said the decline in employment was seen across both full-time and part-time jobs, with fewer people employed than is typically expected for April.

He added that both full-time employment fell by 11,000 and part-time employment by 8,000.

Following the release of the data, the ASX200 rose sharply, as investors interpreted the weaker labour market as a signal that the Reserve Bank of Australia (RBA) may slow or pause further interest rate hikes.

Oxford Economics Australia economist Harry McAuley said the increase in unemployment likely reflects weakening economic sentiment, compounded by global uncertainty and rising costs.

He noted that business confidence has declined due to higher input and borrowing costs, which is affecting hiring decisions.

McAuley also projected that unemployment could peak at 4.8% by late 2027, as private consumption slows and businesses face tougher conditions.

APAC macro strategist Wee Khoon Chong of BNY said the latest figures suggest a softer labour market trend, which could lead the RBA to adopt a more cautious approach to future rate hikes.

However, he added that labour market conditions remain relatively tight and that the data alone may not be enough to offset ongoing inflation pressures.