Jobless rate jolt piles pressure on RBA to cut rates

Higher-than-expected job creation has failed to keep a lid on rising unemployment as the nation’s jobless rate hits 5.2 per cent.

While and extra 28,400 jobs were created last month, it was not enough to overcome a jump in the number of people registering as wanting a job. Picture: AAP

The unemployment rate has ticked up to its highest level in eight months ­despite the ­creation of a ­higher-than-­expected number of jobs last month.

Australia’s jobless rate climbed 0.1 per cent in April to 5.2 per cent, from an upwardly revised rate of 5.1 per cent in March, according to official figures.

The statistics have taken on greater importance after the Reserve Bank said earlier this month that it would focus more closely on the labour market in deciding future ­interest rate moves.

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Analysts said yesterday that the increase in the jobless rate heightened the pressure on the RBA to cut the cash rate.

While there were an extra 28,400 jobs created last month, it was not enough to overcome a jump in the number of people registering as wanting a job.

The size of the labour ­market increased by 49,700 people, leaving an overhang of 21,300 people out of work.

JP Morgan economist Ben Jarman said the statistics would create “headaches” for the central bank, which had previously focused principally on inflation.

“This comes at an unfortunate moment after the RBA has introduced guidance that the labour market will guide policy action (on interest rates), but without clarity on thresholds,” Mr Jarman said.

A net 6300 full-time jobs were cut last month, according to the Australian Bureau of Statistics, but that was offset by an extra 34,700 part-time jobs.

“Our forecast has been for the unemployment rate to move up to 5.4 per cent by year end.

Today’s move keeps us on track for that outcome,” Mr Jarman said.

At 5.2 per cent, the national jobless rate is the highest since last August. Picture: AAP

Capital Economics said there was a worsening ­employment outlook and a greater likelihood of an ­interest rate cut. “The strength in jobs growth in April probably won’t last and, with the unemployment rate now starting to rise, it won’t be long before the ­Reserve starts to cut interest rates,” economist ­Marcel ­Thieliant said.

Economists at UBS said they still expected rate cuts in both July and August, but the risk of a cut next month had “increased materially”.

“Overall, the labour market is worse than the RBA’s ­repeated view it ‘remains strong’,” they said in a research report for investors.

CommSec chief economist Craig James, however, said there was something for everyone in the statistics. “The ­pessimists will focus on a slight rise in the jobless rate,” Mr James said.

“The optimists will focus on another month of job gains and a record labour force ­participation rate.

“It was a good but not great set of numbers.”

At 5.2 per cent, the national jobless rate is the highest since last August.

Among the states, the biggest increase last month was in Victoria, where the unemployment rate climbed 0.3 percentage points to 4.9 per cent.

The rate climbed 0.2 percentage points in New South Wales and South Australia, to 4.5 per cent and 6.1 per cent ­respectively.

In Western Australia and Tasmania, it climbed 0.1 percentage points to 6.1 per cent and 6.8 per cent. Queensland was the only state to show improvement, with a 0.2 percentage point fall, to 5.9 per cent.

The national underemployment rate, measuring the proportion of people who are getting less work than they want, increased 0.3 percentage points to 8.5 per cent.

Australian Council of Trade Unions secretary Sally McManus said many people were being forced to look for second or third part-time jobs.

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