Australian Employment Tumbles in August as Lockdown Hits
Australia shed more jobs than expected in August as the delta variant of coronavirus forced lockdowns in the nation’s two largest cities that stifled efforts to find work and prompted firms to cut staff.
The currency edged down as employment dropped by 146,300 last month, compared with a forecast 80,000 decline, government data showed Thursday. Unemployment fell to 4.5% as the participation rate slid to 65.2% from 66%.
The result supports the Reserve Bank’s decision to delay a review of its weekly bond purchases in light of a pause in the recovery due to delta.
Policy makers correctly anticipated the main hit would come in hours worked and participation, with employers likely remaining in touch with staff to counter a resurgence of labor shortages once restrictions lift.
“The conventional definition of unemployed -- namely that someone is actively searching for work and available to begin -- has little meaning in a world where so many jobs cannot be performed,” said Callam Pickering, an economist at global jobs website Indeed Inc.
“Throughout the pandemic, job losses have consistently been absorbed by lower labor force participation,” he said. “A better measure to understand the impact of economic restrictions is hours worked.”
The report showed hours worked fell by 3.7% in August, or 66 million hours.
The Australian dollar edged down after the release and traded at 73.29 U.S. cents at 1:09 p.m.
Sydney and Melbourne and large swathes of the east coast are under a lockdown that’s impacting about half the nation’s population. As delta overwhelmed their defenses, the leaders of New South Wales and Victoria states are stepping up vaccinations to try to live with the virus, while the federal government has boosted aid to households and businesses.
What Bloomberg Economics Says
“Further deterioration is likely over September and October, including a rise in the unemployment rate. A buildup of wage pressures sufficient to push inflation back into the central bank’s target band remains some years off.”
-- James McIntyre, economist
For the full report, click here
RBA Governor Philip Lowe said this week he expected the main hit to the labor market to be in hours worked, though he added it wouldn’t be surprising to see the jobless rate climb to the “high fives” for a short period.
Among other details in today’s report:
- Under-employment increased by 1 percentage point to 9.3%
- The under-utilization rate advanced 0.9 percentage point to 13.8%
- Full-time jobs dropped by 68,000 and part-time by 78,200
The RBA this month pressed ahead with a tapering of its weekly bond purchases to A$4 billion ($2.9 billion) from A$5 billion, though it put back a planned review of the program by three months to mid-February. It maintains that the recovery has been delayed, rather than derailed by delta.
“Despite the lockdown only impacting the lower East Coast states and territories, the degree of dislocation in economic activity means that GDP is likely to fall by around 4% in the September quarter,” said Sarah Hunter, chief economist for BIS Oxford Economics.
©2021 Bloomberg L.P.