Australia’s unemployment rate has taken an unexpected turn despite fears the Victoria lockdown would cause a surge in jobless numbers.
Latest labour force statistics released by the Australian Bureau of Statistics show unemployment fell to 6.8 per cent in August, with the total number of unemployed people falling by 87,000 over the period.
In July, unemployment reached a 22-year high of 7.5 per cent, with a number of economists expecting the figure would worsen due to stage 4 lockdown measures imposed in Victoria.
The participation rate only improved by 0.1 percentage points over the month.
ABS head of labour statistics Bjorn Jarvis said women accounted for about 55,000 of those coming out of unemployment last month.
“With participation relatively unchanged, the increase in employment and decrease in unemployment saw the unemployment rate decrease 0.7 percentage points to 6.8 per cent,” Mr Jarvis said.
Treasurer Josh Frydenberg said the figure was significantly better than market expectations.
“We recognise that despite this fall today in Australia’s official unemployment rate, many Australians are doing it tough, and the road to recovery will be long,” he said.
“What you can take away from these numbers are more people are getting back to work.”
The effective unemployment rate, which includes people that are unemployed and those on zero hours, fell from 9.8 per cent to 9.3 per cent.
Employment in Victoria dropped, with 42,400 fewer jobs in the state compared with the previous month.
The state’s unemployment rate is sitting at 7.1 per cent, which is higher than the national average.
Mr Frydenberg said the Federal Government had proposed some ideas around the easing of restrictions, which would be discussed at National Cabinet on Friday.
Market consensus for the monthly jobs decline was 35,000, but economists were expecting the figures to be higher.
ANZ was expecting a fall of 50,000, with the unemployment rate to rise to 8 per cent.
CommSec said its survey forecast was 7.7 per cent, but instead, the biggest monthly fall in the jobless rate in 32 years was achieved.
“There is no doubt that this is a stunning set of job figures – especially considering that the nation’s second largest economy was in lockdown throughout the month,” it said.
“There will still be bumps on the road ahead. However, the hope is that the unemployment rate will now peak well below official forecasts of near 10 per cent.
“In fact, for this to occur at least 400,000 jobs would have to be shed by year end – unlikely with Victoria’s restrictions being eased.”
Camera IconCommSec said its survey forecast was for 7.7 per cent unemployment. Credit: News Corp Australia, NCA NewsWire/Bianca De Marchi
AMP said the headline unemployment rate was understating the level of weakness in the labour market, the truer measure being the effective unemployment rate.
Westpac economist Justin Smirk said employment would need to collapse and between 400,000 and 500,000 jobs lost to meet the Reserve Bank’s forecast of 10 per cent unemployment.
“Without a doubt, the recovery in the rest of the country has been more robust than we thought, while the hit to the Victorian labour market was not as bad as expected,” he said.
Mr Smirk also flagged the tapering of support measures such as JobKeeper could fuel a further decline in employment levels.
Camera IconWestpac economist Justin Smirk said more than 400,000 jobs would need to disappear to meet a 10 per cent unemployment level. Credit: News Corp Australia, Jack Tran
Opposition employment spokesman Brendan O’Connor said Labor was concerned the encouraging figures would convince the Government it could do less to support the economy and the almost one million Australians still out of work.
“What we would ask the Government to do is to continue to provide support for our economy, for businesses, for workers,” he said.
“To do that they should not be cutting JobKeeper, they should not be scrapping JobSeeker, they should not be freezing the pension.”
Camera IconIn August, Treasurer Josh Frydenberg confirmed Australia had entered a technical recession. Credit: News Corp Australia, Sean Davey
Employment growth over the month increased by 1 per cent, translating to 111,000 people finding full-time, part-time or casual employment.
National hours worked only improved by 0.1 per cent compared with the previous month, largely caused by a 4.8 per cent fall in total hours worked in Victoria.
Mr Jarvis said the weaker increase in hours worked suggested the rise was being caused by stronger jobs growth in part-time employment, which had been almost eight times greater than the increase in full-time employment.
Mr Frydenberg will hand down the Federal Budget on October 6 and says the focus will be on tax, industrial relations, cutting red tape, energy, skills and infrastructure.
“The way to get our Budget back to where it was is to grow the economy and that will take years,” he said.
Camera IconVictoria’s unemployment rate is higher at 7.1 per cent. Credit: News Corp Australia, NCA NewsWire/ David Crosling
The Reserve Bank of Australia is expecting unemployment to peak at 10 per cent in the December quarter, with jobs figures to slowly fall over 2021.
The pandemic has hurled the country into the worst economic recession – two quarters of negative growth – since the Second World War, with gross domestic product for the June quarter sliding by 7 per cent.