SYDNEY (Businesshala) – Australian employment fell sharply for a second month in September as coronavirus lockdowns forced firms to lay off workers, while the unemployment rate caused another big drop in the number of people looking for work. declined in
Policymakers are counting on a recovery in the coming months as rapid advances in vaccination have allowed restrictions in Sydney to be eased, with Melbourne and Canberra soon to follow.
Relief was desperately needed with Thursday’s data from the Australian Bureau of Statistics (ABS) showing that employment fell by 138,000 in September, down from 146,100 in August.
The unemployment rate rose from 4.5 percent to 4.6 percent, but it has been artificially halted by restrictions on people looking for work and those who count as unemployed.
“The low national unemployment rate reflects low participation during the recent lockdowns, rather than strong labor market conditions,” said Björn Jarvis, head of labor statistics at ABS.
The participation rate fell 0.7 percent to 64.5% in September, a long way from a record high of 66.2% in June. As this shift ends, the unemployment rate may well rise over the next few months, even as employment improves.
The Reserve Bank of Australia (RBA) has warned that unemployment is likely to top 5% by the end of the year, although it is optimistic activity will rise sharply as lockdowns ease.
The central bank still believes that a sustained, and much needed, lifting of wages and inflation would require the unemployment rate to drop to 4% or less.
Speaking on Thursday, RBA Deputy Governor Guy DeBelle noted that while the labor market had enjoyed a strong recovery before the lockdown, wages remained stubbornly high, with very few workers getting more than 2% annual growth.
The RBA has long argued that a more than 3% wage increase was needed to bring inflation into its 2-3% target band, after years of undershooting.
Daybell said the reduction in wages and inflation meant Australia did not have to follow some other developed countries in rolling back policy stimulus.
Markets have recently started betting that the RBA may raise interest rates at the end of next year, while the bank itself continues to say that the move is unlikely until 2024.