Unemployment rate jumps to 3.7 per cent

Labor has backed workers wanting a big pay rise after years of going backwards.

Labor has backed workers wanting a big pay rise after years of going backwards. Photo: AAP

The jobless rate rose to 3.7 per cent in April, with about 4000 jobs disappearing from the economy.

The participation rate as measured by the Australian Bureau of Statistics in its monthly labour force report fell 0.1 percentage point to 66.7 per cent.

“With employment dropping by around 4000 people and the number of unemployed increasing by 18,000 people, the unemployment rate rose to 3.7 per cent,” ABS head of labour statistics Bjorn Jarvis said.

“The small fall in employment followed an average monthly increase of around 39,000 people during the first quarter of this year,” he added.

The result for April follows months of solid jobs numbers, with the unemployment rate coming in at 3.5 per cent in March.

The labour market is expected to keep cooling off, however. Signs of weakness are already emerging via a shrinking number of unfilled roles and firms starting to slow up on hiring.

Treasury foresees the jobless rate drifting up to 4.5 per cent in 2024/25 before sinking back to 4.25 by 2026/27.

It has already ticked up from a near-50-year low of 3.4 per cent in September last year.

Enduring tightness in the labour market has niggling at the Reserve Bank as wages, especially across the private sector, tend to lift when firms are competing for workers.

But official wage data suggests pay is lifting at a pace the central bank is comfortable with, rising 0.8 per cent over the quarter and 3.7 per cent annually.

Earlier this week, the RBA warned higher than expected wage growth this year could derail its plan to reduce inflation, if productivity did not also lift.

– with AAP

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