❗️🇦🇺Westpac On Australian Labour Report

• Consistent with a strong holiday effect, April participation fell an out sized 0.3ppts from its record high of 66.3% to 66.0%. Females led the fall, down 0.5ppt, compared to males at –0.1ppt. We suspect that as there is a larger share of females who are marginally attached to the labour force, compared to males, the effect of family holidays would have a bigger impact on females. This resulted in a much larger –54.0k/–0.8% fall in the female labour force compared to the –10.3k/–0.1% decline in the male labour force (almost flat in the month).

• Despite the fall in total employment, lower participation saw unemployment edge down 0.2ppt, from a revised 5.7% to 5.5% in April. Given that we think the holidays had a meaningful impact on participation as well as employment we are looking for a post–holiday bounce in May.

• Our forecast for participation to return to 66.3% will lift the unemployment rate back to 5.7%.

• April employment came in below expectations with evidence pointing to a stronger-than-usual seasonality around the Easter/school holidays. Declining female and part-time employment are indirect signs, a surge working zero hours due to being on leave is a more direct sign.

• Payrolls data have been a consistent guide to the direction, if not always the magnitude, of changes in Labour Force employment. Payrolls for the first two weeks of May (the reference weeks for the May Labour Force Survey) are now up 0.3% on the first two weeks in April. Our forecast for employment in May is +30k/0.2% which in original terms (Payrolls are not seasonally adjusted) is a +74.0k or 0.6% rise; May has tended to have a seasonal rise of around 0.3%

• Payrolls had a significant fall in SME jobs, plus the greater loss of jobs in the sectors more dependent on JobKeeper, suggesting some firms are facing meaningful headwinds.