Australia Watch: Labour review: Cracks starting to form?

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Australia Watch: Labour review: Cracks starting to form?

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Australia Watch

Labour review: Cracks starting to form?

Labour market surprisingly weak in April 21 May 2026

The unemployment rate increased to 4.5% (4.49% unrounded) in April, weaker than Economics

consensus expectations of 4.3% (BofAe: 4.2%), despite the participation rate declining Australia

10bps to 66.7% (Exhibit 10). Employment fell by 18.6k, well below expectations of +15k Nick Stenner, CFA

(BofAe: 22k) as both full-time and part-time jobs declined (Exhibit 1, Exhibit 2). The RBA Australia & NZ Economist

are forecasting an average unemployment rate of 4.2% for 2Q, so it looks like they will Merrill+61 2 9226Lynch5031(Australia)

have a softer read on the labour market going into the Jun and Aug meetings. nick.stenner@bofa.com

Johnny Liu, CFA

Australia & NZ EconomistUnderlying trends suggest the labour market is easing Merrill Lynch (Australia)

Monthly labour data are noisy, and focusing on underlying trends provides the best read johnny.liu2@bofa.com

on labour market dynamics. Some of this month’s noise is likely related to the survey Isabel Hartstein

reference period (29 March to 11 April) fully capturing the Easter break. Declining FX & Rates Strategist

Merrill Lynch (Australia)

employment for 15-24-year-olds drove weaker employment in April (Exhibit 9). In trend isabel.hartstein@bofa.com

terms, the unemployment rate remained at 4.3%, comfortably below the RBA’s NAIRU

estimate of 4.6%, but has risen by 24bps y/y. Forward-looking indicators, such as

declining ANZ-Indeed job ads, point to further easing in the months ahead (Exhibit 3,

Exhibit 4, Exhibit 5, Exhibit 8).

RBA: Easing labour market points to RBA on hold ABS: Australian Bureau of Statistics