NAB now sees the RBA hiking in August (previously June), as unemployment jumps - NAB

21 May 2026
Economy and Markets

Change in rate expectations

  • Unemployment jumped to 4.5% in April (NAB and consensus 4.3%).
  • Employment fell 19k (NAB and consensus +15k).
  • These data can be volatile month to month, but this is a soft print, and one that challenges the RBA’s SoMP judgement of labour market resilience.
  • NAB now expects the RBA to hike in August (previously June).

Today’s labour market data are softer than expected. The unemployment at 4.5% (4.49% unrounded) is a new cycle high and contrasts the RBA’s SoMP forecast for an unemployment rate averaging 4.2% in Q2 before ending the year at 4.3%.

We have noted some tension between the SoMP assessment that the labour market would remain tight this year and RBA Board’s framing of competing concerns on both sides of the mandate.

Today’s data challenge the SoMP forecast while highlighting risks on the full employment side of the mandate. There is now less urgency for the RBA Board to lean more firmly against inflation risks, and the balance of risks has shifted in favour of the Board’s characterisation that they have some ‘space’ to monitor incoming data for both inflation and activity impacts due to higher oil prices and uncertainty coming out of the Middle East.

As a result, we have pushed our expectation for a further 25bp increase in the cash rate to the August meeting (previously June).

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