From Deloitte’s Weekly Economics Briefing:
New payroll data indicates that Australia’s labour market has once again fallen from its perch, after an impressive recovery during the first half of the year.
Released late last week, the ABS data revealed that total payroll jobs fell 3.5% between the week ending 19 June, before Sydney’s latest lockdown kicked off, and 14 August. Unfortunately, these payroll numbers are an early sign of what to expect on Thursday, when ABS monthly labour market data for August will be officially released. Thus far in the pandemic, they’ve formed a reliable indicator.
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It’s a big U-turn from just three months ago when employment rocketed above pre-COVID levels, buoyed by business and consumer confidence.
Sadly too, the pain will only worsen as data for September and October is revealed in the coming months. Internet job ads dropped 5.6% in August, with big falls across NSW (-9.2%), ACT (-9.0%) and Victoria (-5.9%), and more than half the country are in lockdown and will remain so for at least another month.
Yet, if there’s a positive to be found, it’s that these impacts are concentrated in Australia’s southeast. Elsewhere in the country, where COVID-19 cases have been kept at bay, labour markets have remained relatively healthy, elevated above pre-COVID levels.
In New South Wales, payroll jobs crashed 8.5% between 19 June and August 14. That’s higher than the state’s 8.3% fall when COVID first struck in April 2020. In level terms, it’s even worse, on account of June employment being above pre-pandemic levels.
To no surprise, the distributional impacts of early COVID and present lockdowns in New South Wales are broadly similar. Both younger and older people, who are more likely to be employed in industries most affected by lockdown restrictions, have been hit relatively harder. Likewise, workers in small and medium-sized businesses are particularly vulnerable.
From an industry perspective, ‘arts and recreation services’ and ‘accommodation and food services’ have again been smashed, while ‘other services’, which includes hairdressers, beauticians and religious services, and ‘construction’, have this time been worse hit due to tighter restrictions. Encouragingly, NSW construction recovered 2.9% in the first two weeks of August after the state’s construction ban was reversed.
Across the rest of Australia, payroll jobs also fell everywhere except for Western Australia, where total jobs rose 0.5%. Victorian jobs dropped 1.6% between 19 June and 14 August, but the state’s population wasn’t in lockdown for various periods in July. As such, Victorian employment is expected to continue tumbling.
Nevertheless, despite these falls, payrolls jobs remained more than 1% above their pre-COVID starting position in every state or territory on August 14, except New South Wales.
Australia’s biggest states are suffering. Rapidly rising vaccination rates are the shining light on the horizon, along with the knowledge that economic activity – including jobs – did rebound fairly quickly from 2020’s lockdowns, and so may do so again.