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Australia's April Labor Data Supports Expectations for Rate Pause in June, ANZ Says

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Australia's labor data for April, which showed a rise in the unemployment rate, was generally on the soft side, lending credence to expectations for a pause in the rate hike cycle at the Reserve Bank of Australia's June policy meeting, ANZ said in a Thursday report.

The data showed the number of employed people decreasing by 18,600 and the unemployment rate rising to 4.5% from 4.3% in March.

Hours worked increased a "very strong" 0.8% month over month to log a 1.3% increase over the past two months, appearing as an anomaly that is expected to reverse in the May data, the bank said.

ANZ said it expects the central bank to still assess the labor market as "tight" in its next post-meeting statement, but the latest data suggests it may soon have to describe the market as "balanced." The labor surveys for May and June will provide a clearer read on the extent of softening in the market following the Middle East conflict, ANZ said, adding that the unemployment rate is likely to trend a bit higher over the remainder of the year.

"Overall, today's print supports our case that 4.35% will mark the peak for the cash rate over this cycle, with the activity data likely to soften enough to keep the RBA on hold at the August meeting following a pause in June," ANZ said.

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