Unemployment falls to 4.9% in April and cash rate might stay on hold until July or longer

Unemployment in April fell to a surprise 4.9%. The March figure was an unrevised 5.2%.

Total employment rose 15,500 to 11.501 million in the month, according to the Australian Bureau of Statistics.

HSBC chief economist Paul Bloxham says the data is a good sign for employment trends in Australia.

He adds that the data will likely convince the Reserve Bank of Australia to keep the cash rate on hold.

He reaffirmed his expectations of the RBA keeping rates on hold for the rest of this year, having said straight after the May RBA meeting that "given the recent improvements in the labour market and business conditions, combined with the fact that rates are now at expansionary levels, we think this could be the end of the loosening cycle."

RBC Capital Markets economist Su-Lin Ong says the RBA would delay any further rate cuts until after June because of the strong jobs data.

AMP Capital chief economist Shane Oliver tweeted that it was "Great news but hard to believe given anecdotes. Still see unemp rising over next six months."

The latest job cuts came today at Australia's largest dairy food processor and marketer, co-operative Murray Goulburn, which is cutting a further 300 positions inaddition to the 64 jobs shed in March, when Murray Goulburn announced it would shut down its milk driers at Rochester in northern Victoria.

The state by state unemployment break up was:

Savanth Sebastian, the CommSec economist, notes that "importantly the improvement has been over the past two months and the next couple of months will confirm if the pickup in employment is sustainable".

"The Reserve Bank is likely to still remain open to rate cuts in coming months – particularly given that inflation is holding at the low end of the 2-3% target band and given the ongoing troubles in Europe.

"As such CommSec is still pencilling a further quarter of a per cent rate cut in August."