RBA interest rates: April jobs data shows massive 89,000 new roles created in a month

An exceptional month of Australian jobs growth has sparked warnings of an inflation bounce, but an interest rate cut next week is still seen as highly likely.

About 89,000 Aussie jobs were added in April and three quarters of those new roles were for women. Most new jobs were full-time.

The unemployment rate remained at 4.1 per cent, according to fresh data from the Australian Bureau of Statistics released on Thursday.

There was a huge influx of workers into the labour force in April — and the share of Australia’s population in jobs is close to a record high.

The numbers are the last key piece of the economic puzzle before the Reserve Bank meets on Monday and Tuesday next week to lock in an interest rate decision for May.

Thursday’s figures blitzed market forecasts and investors were spooked into modestly reducing bets on a rate cut. Borrowers will still likely win relief at the upcoming meeting, but have been told to expect fewer cuts this year.

April’s jobs growth was almost four times what the market had expected, IG Australia market analyst Tony Sycamore said.

He said traders had dialled back the chances of a May cut from 90 per cent to 80 per cent following the news.

“Today’s jobs report has provided yet another reminder of the resilience of the Australian labour market,” Mr Sycamore said.

He said rate relief was still likely, however.

HSBC’s Paul Bloxham also tipped the RBA would reduce rates — driven by the trade war chaos — and cautioned there had been “statistical quirks” in recent jobs figures.

RBA economists will be hoping the hot employment numbers are not a sign of cost pressure returning to the economy.

There has been white hot debate between economists and the central bank over how low unemployment can remain without reigniting inflation.

Strong demand and stimulus-fuelled spending coming out of the pandemic pushed the jobless rate down and prices up. Moving too fast to reduce interest rates risks releasing that inflation dragon once more.

VanEck head of investments Russel Chesler warned there was a chance inflation would bounce back beyond the RBA’s 3 per cent target band.

He said a rate cut was likely but not “strictly necessary” given the strong labour market, solid retail sales and rising house prices.

“With continuing low unemployment rate and wage growth having accelerated to 3.4 per cent, further falls in inflation will be limited,” Mr Chesler said.

“There is actually a risk of inflation increasing.

“The latest data shows inflation is within the RBA’s target range, but it won’t take much to push it back up past the 3 per cent mark.”

Wages picked up pace in data released this week and, at 3.4 per cent, were running faster than inflation for the year to March.

Education, healthcare and social assistance were among the top performers in the quarter — and analysts slated those gains to government-backed pay deals for aged care and early childhood services.