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Australia's April Labor Data 'Genuinely Weaker Than Expected,' Westpac Says

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Australia's April labor data contains some "abnormal" seasonality linked to the timing of Easter, but the result was "genuinely weaker than expected" as employment fell by 18,600 and the jobless rate jumped to 4.5%, Westpac said in a Thursday report.

The downside surprise can be attributed to the youth cohort of ages 15 to 24, where employment tumbled by 56,400, and the unemployment rate jumped 0.9 percentage points, the bank said.

The noise and seasonality should disappear in May's data to provide a clearer picture of the underlying momentum, Westpac said, adding that it expects most of the labor market softening to materialize in the second half of the year as the wider economy deals with the impact of the Middle East conflict.

"Our call for the [Reserve Bank of Australia] to pause in its June policy meeting is now high-conviction, and the chance that the RBA waits even longer is non-zero," Westpac said.

"We continue to expect that the RBA will resume raising the cash rate when the size and pace of pass-through of the energy price shock is revealed," it added.

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