BCEC Monthly Labour Market Update – April 2026

• Unemployment rate rises from 4.3 per cent to 4.5 per cent in April.
• Employment down by 18,600, with women bearing the brunt of job losses.
• The rise in unemployment may buy some time on another interest rate rise, but the upcoming inflation figure for April will be the critical factor.

On recession watch

Figures from the April Labour Force Survey mark the first release of a major economic indicator likely to be substantially impacted by the US-Iran conflict and associated disruption to global oil markets. Employment fell by 18,600 persons for the month and the national unemployment rate increased from 4.3 per cent to 4.5 per cent, the highest rate in four and a half years.

To the extent that weakening in the labour market reflects the fall-out from the conflict and the jump in oil prices it was relatively modest, although the worst might yet to be seen. The softer figures in April could be anything from a bit of statistical volatility in the data and business-as-usual to the start of a crash.

The labour market deterioration was limited to women, who saw falling full- and part-time employment, a slight drop in participation, and an increase in the unemployment rate from 4.0 per cent to 4.4 per cent. There was a modest increase in employment for men and no change in their unemployment rate (4.6%).

Since the previous month’s figures we’ve had a 0.25 basis point rise in interest rates and a Federal Budget handed down – both equally as well-received by the public. They have come with updates on the Reserve Bank (RBA) and Treasury outlooks for the economy. Perhaps most alarmingly, the RBA’s Statement on Monetary Policy contained a downward revision to projected real economic growth to the end of 2026, from 1.8 per cent in the February statement to 1.3 per cent in the May statement. However, projected employment growth for that same period was revised up from 1.3 per cent to 1.4 per cent.

Lower output from higher employment does not bode well for labour productivity – and growth in labour productivity is one thing we desperately need to curb inflation.

The latest RBA projections are for the inflation rate to hit 4.8 per cent for the upcoming June quarter with an unemployment rate of 4.2 per cent. Treasury projections contained in the recent budget papers are slightly more pessimistic, putting inflation at 5.0 per cent and the unemployment rate at 4.25 per cent for the June quarter.

April’s unemployment rate of 4.5 per cent, with the trend estimate sitting at 4.3 per cent, suggest the labour market may be even weaker still. However, that’s unlikely to be enough evidence of a downturn for the RBA to change course on monetary policy. If there was a predisposition amongst Board members to holding off on another rate rise to give more time for the consecutive February, March, and May hikes to take effect, the April labour force figures may just buy a bit of extra breathing space.

The upcoming inflation figure for April will have more bearing. There won’t be another update on the labour market before the RBA Board meet again in mid-June. The spike in fuel prices paid by consumers predictably contributed to an increase in the CPI to 4.6 per cent for March but won’t have impacted on the key ‘underlying’ measures of inflation that remove volatile items. However, we’re likely to see those underlying measures also pick up in the April data as rising fuel costs flow through to prices of a broader range of goods and services.

More capital gains (in jobs)

The Australian Bureau of Statistics announced they will be making changes to how outputs from the Labour Force Survey are released, meaning changes to some regular features of the Monthly Labour Market Updates, including the frequency of reporting trends in employment by industry.

One immediate change has been the discontinuation of seasonally adjusted labour force figures for the ACT and NT. From this issue onwards we will use trend figures for the two territories for the major labour market aggregates but continue to focus on seasonally adjusted estimates for the six states and nationally.

The March MLMU noted some suspiciously large monthly movements in the seasonally adjusted figures for the ACT: employment up 1.3 per cent, the labour force by 2.1 per cent, along with a jump in the unemployment rate from 3.5 to 4.2 per cent. With that series now discontinued, we can’t check whether that was just monthly volatility. However, the April trend estimates show employment in the ACT growing at an annualised rate of 4.2 per cent – more than twice the trend rate of jobs growth nationally.