The ASX200 surged 1.75% to 7,889 points today, following the lead of US markets which set new all-time highs overnight.
The local market opened on a strong note before trading sideways ahead of the late-morning release of Australian Bureau of Statistics (ABS) employment data, which supported the market higher throughout the afternoon.
In April the unemployment rate rose by more than expected, cutting the likelihood of a rate rise by the Reserve Bank of Australia (RBA). This propelled the Real Estate sector higher — up 3.7% today — with Tech, Financial and Consumer Discretionary stocks also showing strength.
More employed; more looking for work
ABS jobs data showed that while the unemployment rate rose in April, it was driven by an influx of people looking for work. The number of employed people rose by 38,500 during the month, a sharp turnaround from the 6,000 decline seen in March and well above the expected 23,700.
The unemployment rate jumped to to 4.1% in April — up from March’s 3.8% rate and exceeding expectations of 3.9% — as the growth in workforce outpaced job creation.
This jump in unemployment has cut expectations of a further rate hike from the RBA, marking a big swing from early in the month when the probability had been as high as 40%.
Markets now imply that the chance of a cut to the 4.35% cash rate by as early as December is around 54%.
Australia's participation rate edged up to 66.7% in April from 66.6% in March. Full-time employment decreased by 6,100 during the same period, down from 26,600 previously. Meanwhile, part-time employment saw a notable increase of 44,600, compared to a decline of 32,500 in the prior month.
ABS head of labour statistics Bjorn Jarvis said, "With employment rising by around 38,000 people and the number of unemployed growing by 30,000 people, the unemployment rate rose to 4.1% and the participation rate increased to 66.7%."
"The 30,000 people increase in unemployment reflected more people without jobs available and looking for work, and also more people than usual indicating that they had a job that they were waiting to start in," Jarvis added.
He further noted, "The increases in both employment and unemployment in April saw the participation rate up by 0.1 percentage point to 66.7% in April. It has been relatively high, above 66.5%, since March 2023.
"The employment-to-population ratio remained steady at 64% in April, indicating that recent employment growth is broadly keeping pace with population growth. This suggests that the labour market remains tight, though less tight than late 2022 and early 2023."
The higher-than-expected unemployment rate is now set to dominate market reaction, particularly as stronger than expected jobs growth was entirely in part-time jobs.
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