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Australia's Unemployment Rate Rises in April

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05/15/2019 | 09:59pm EDT

By James Glynn

SYDNEY--Australia's unemployment rate rose in April, despite a strong gain in employment, bringing closer the first interest-rate cut in three years.

The unemployment rate rose to an unexpected 5.2% in April as more people were looking for work, the Australian Bureau of Statistics said Thursday. The bureau also revised March's unemployment rate up to 5.1% from 5.0%.

The number of people employed in April rose 28,400, higher than the expected 15,000. Full-time employment fell by 6,300 but the number of those in part-time work rose by 34,700.

Workforce participation rose to 65.8% in April, from 65.7% in March.

Following news this week that wages growth stalled in the first three months of this year and that firms have turned negative in regard to hiring, the RBA looks closer to cutting interest rates at its June 4 policy meeting.

The Australian dollar fell to US$0.6902 shortly after the employment data was released on Thursday. It was trading near US$0.6930 before the release.

RBA Governor Philip Lowe said last week that unemployment needs to fall if wages and inflation are to rise toward the desired 2-3% target band.

Inflation has undershot the band for over three years, and in the first quarter moved away from the target, prompting the RBA to lower its forecasts for inflation.

Financial markets have built in a 40% probability that a cut, the first since August 2016, will be delivered in June. A cut in August is fully priced in.

Economists widely expect minutes of the RBA's May policy meeting on Tuesday will confirm an overt easing bias, with a speech later in the day by Mr. Lowe in Queensland to cement the change.

Economic growth has slowed sharply since the middle of 2018, as consumers have reined in spending as house prices have fallen, wages growth remains flat and household debt soars at record levels.

-Write to James Glynn at james.glynn@wsj.com

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