(Bloomberg) -- Australia’s youth unemployment rate has jumped, signaling a softening in the broader labor market and a potential precursor to further weakness in the economy ahead, according to Bloomberg Economics. 

The jobless rate for 15- to 19-year-olds has risen almost 5 percentage points in the past 18 months, analysis by Bloomberg Economics’ James McIntyre shows. Its increase to 14.4% in April from a trough of 9.5% in October 2022 contrasts with a relatively steady headline number over that period. 

“Trends in youth unemployment tend to lead broader labor market turning points,” McIntyre said in a research note. “With economic growth already showing signs of weakness, longer job searches and more competition for positions reinforces our view that the unemployment rate will rise quickly over coming months.”

McIntyre expects Australia’s jobless rate will reach 5% by June 2025 from 4.1% now. That’s much higher than the Reserve Bank’s forecast of 4.3%. 

The softening labor market contrasts with the US, where the picture is far more resilient. In Australia, the employment-to-population ratio for 15- to 24-year-olds has fallen by 3.5 points since November 2022 whereas the ratio for the same cohort in America is largely unchanged, McIntyre said.

Further signs of labor market deterioration can be found in the increase in the median duration of job searches, he said, as the number of applicants per job ad surges.

“It’s taking longer for unemployed people to find work,” McIntyre said. “Competition for jobs has intensified, and is likely to continue to build even after rate cuts arrive.”

Financial markets are pricing the Reserve Bank will only begin cutting rates in the first half of 2025.  McIntyre forecasts the RBA will begin easing late this year.

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