Last week’s labour force report for June from the Australian Bureau of Statistics (ABS) recorded an unemployment rate of just 4.9% – a decade low:
This came despite Australia’s labour force participation rate running at a near all-time high:
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The number of job ads per unemployed in Australia has also fallen to its lowest level in records dating back to the early 1980s:
However, Deloitte’s economics team believes that the lockdowns across more than half the nation – NSW, Victoria and South Australia – places at risk Australia’s “stunning” jobs recovery:
The lockdowns, driven by the emergent COVID Delta strain, will have a notable impact on the Australian economy in the near term. And of course, for many individuals and small businesses, they can be financially and socially devastating…
The June Labour Force Survey reference period was Sunday 30 May to Saturday 12 June, which included Victoria’s 14-day lockdown beginning 28 May. The impact of the Victorian lockdown on the national numbers can be seen in a decline in total hours worked, and an increase in the underemployment rate. Total hours worked declined 1.8% nationally, with total hours worked falling by 8.4% in Victoria.
The unemployment rate declined in Victoria to a stunning low of 4.4%, but the participation rate also declined, with some people leaving the labour force. The decline in total hours worked saw the underemployment rate increase nationally to 7.9%, with the underemployment rate in Victoria jumping more than two percentage points to 10%.
The June data, and current circumstances, suggest that the Australian labour market’s remarkable recovery is at some risk of a sudden halt. To date, we have seen relatively quick recoveries from short lockdowns, but this time we are looking at lengthier lockdowns covering bigger populations. Consumer confidence has slumped in NSW and on average around 25,000 jobs may be lost each week of the Sydney lockdown. How quickly these jobs can be recovered once restrictions are eased is not clear, with the Delta strain bringing much more uncertainty about the path forward over the coming months until vaccination rates are adequate.
Australia’s labour market was in remarkable shape prior to these lockdowns. Let’s hope the damage is contained and the economy bounces back hard again, like it did last time.