Jobs market holds key to next Reserve Bank rates call

Australia’s Reserve Bank (RBA) must weigh inflation control against employment risks as the June rate decision approaches. The Australian Bureau of Statistics will release April’s Labour Force survey on Thursday, with unemployment expected to remain at 4.3% alongside 20,000 new jobs. A stronger-than-expected result could justify further rate hikes, while a rise toward 4.5% unemployment would likely reduce market expectations for increases later this year. Market pricing currently assigns a 1-in-10 chance of a June hike but fully anticipates one rise by November. May meeting minutes revealed RBA board members remain focused on inflation, despite growing concerns over economic activity and employment. Economists warn prolonged Iran conflict could worsen labor market conditions, creating a dilemma for the RBA. Commonwealth Bank revised its 2026 growth forecast downward to 1.6% and raised its peak unemployment projection to 4.6%. The bank’s economists noted inflation remains elevated and will rise further, while slowing growth may ease demand pressures. SEEK’s April data showed job ads up 0.2% and advertised salary growth at 0.4%, though hiring confidence remains subdued amid inflation and fuel cost pressures. SEEK chief economist Blair Chapman highlighted broad-based job ad growth across states, except the ACT, but cautioned businesses face significant headwinds. Rising living costs and fuel expenses are dampening hiring sentiment as the financial year concludes. The RBA’s next move hinges on balancing inflation control with labor market stability amid economic uncertainty.