Unemployment: 600,000 Aussie jobs lost in April

Prime Minister Scott Morrison says the focus is to “reopen the economy” after job figures revealed the number of Australians in employment slumped by nearly 600,000 in April.

Prime Minister Scott Morrison says Australians must “stand firm together” and fight the economic devastation brought by coronavirus after it was revealed 594,000 jobs were lost in April.

Mr Morrison said it was a “very tough day” for Australia and that the massive loss of work was “shocking”.

The PM said Australians must brace themselves for further “hard news to take” over the coming months and that the impending economic recession would be tougher than the global financial crisis.

“This is harder,” he said. “We haven’t seen this before and for young people who have never experienced that, this is beyond anything they could imagine.”

The jump showed the importance of JobKeeper and reopening the economy, he said

Treasurer Josh Frydenberg and Prime Minister Scott Morrison arrive for today’s press conference. Picture: Getty Images

Treasurer Josh Frydenberg said the data was “heartbreaking” and revealed the “real and painful” economic impact of the virus.

“This reiterates why our financial commitments to respond to the coronavirus were so important and are so important.”

The number of Australians in employment slumped by nearly 600,000 in April, figures released this morning show.

However, that giant jump is not fully reflected in the new unemployment rate, which rose by one percentage point to 6.2 per cent.

Official unemployment increased by just over 100,000, monthly data released by the Australian Bureau of Statistics showed.

“The large drop in employment did not translate into a similar sized rise in the number of unemployed people because around 489,800 people left the labour force”, said ABS head of labour statistics Bjorn Jarvis in a statement.

“This means there was a high number of people without a job who didn’t or couldn’t actively look for work or weren’t available for work”, Mr Jarvis said.

People queue up outside a Centrelink office. Picture: AFP

This is likely to be connected to the JobKeeper wage subsidy that maintains the connection between an employer and employee who may not be working.

Economists had been expecting a rise to 8.3 per cent, although forecasts varied wildly.

The ABS said about 2.7 million people – or one in five workers – had either “left employment or had their hours reduced between March and April.”

The underemployment rate rose to a record high 13.7 per cent, up 4.9 percentage points.

Share market investors have seen a dip on the ASX in early trading, with nearly all industry sectors lower.

The S&P/ASX200 benchmark index was down 69 points, or 1.27 per cent, to 5352.9 points after the first 15 minutes of trade on Thursday.

Earlier, US stocks tumbled as Federal Reserve Chair Jerome Powell warned the coronavirus could leave the economy with lasting scars as America faces its worst recession since WWII.

Mr Powell said in a speech today the economic crisis caused by COVID-19 is worse than any since the 1940s and the government may need to add more fiscal support.

“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Mr Powell said, pointing out that 40 per cent of households making less than $40,000 per year had lost a job in March.

“We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased. Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs.”

Federal Reserve Board Chairman Jerome Powell. Picture: Getty/AFP

In late trading, the S&P 500 had recovered slightly but was down more than 1.7 per cent, while the Dow Jones was over 2 per cent lower, as the tech-heavy Nasdaq fell more than 1.5 per cent.

The declines were broad, with all 11 sectors of the S&P 500 in the red. Shares of beaten-down airline, energy and bank stocks were among the biggest decliners.

President Donald Trump, frustrated by COVID’s impact on the US economy and Wall Street, pointed the finger at wealthy investors for supposedly manipulating the stock market by making strong statements.

In a tweet, Mr Trump said to be wary of wealthy investors using their platform to comment negatively about stocks, when they tend to profit from betting against the market.

“When the so-called ‘rich guys’ speak negatively about the market, you must always remember that some are betting big against it, and make a lot of money if it goes down,” Trump tweeted. “Then they go positive, get big publicity, and make it going up. They get you both ways. Barely legal?”

While Mr Trump didn’t specify whom he was referring to, his comments followed billionaire hedge fund manager Stanley Druckenmiller’s remarks about the stock market being historically overvalued.

Stanley Druckenmiller. Picture: Bloomberg

“The risk-reward for equity is maybe as bad as I’ve seen it in my career,” Mr Druckenmiller said.

“The wild card here is the Fed can always step up their (asset) purchases.”

Mr Druckenmiller, chairman and CEO of the Duquesne Family Office, also said he thought the market was overreacting to news of progress on antiviral drugs, such as Gilead’s remdesivir.

US President Donald Trump. Picture: AFP

Mr Powell’s comments added to Wall Street’s worries about a second wave of coronavirus infections compromising efforts to reopen the US economy, which led stocks to slide Tuesday.

Beauty saloons are roaring back to life around the world with easing of lock downs. Picture: AFP

“The stock market seems to get the message that the Fed chair doesn’t see the best economy in 50 years returning any time soon,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “Companies can’t make money if the wheels of the economy fall off the bus and that means the stock market is overvalued at current levels.”

Mr Powell said the virus crisis may require “additional policy measures” from the Fed, which has already slashed its benchmark interest rate to near zero and started buying up trillions of dollars in assets to backstop the economy.

“The overall policy response to date has provided a measure of relief and stability, and will provide some support to the recovery when it comes. But the coronavirus crisis raises longer term concerns as well,” Powell said in a livestreamed address hosted by the Peterson Institute for International Economics.

With restrictions being eased across Australia, the shoppers and workers are slowly increasing in the CBD in Sydney. Picture: AAP,

“The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” he added.

European stocks were also being mauled over concerns of a second wave of virus infections.

“Traders remain worried about the possibility of COVID-19 cases rising again as governments ease their restrictions in relation to the lockdowns,” said market analyst David Madden at CMC Markets UK.

In the eurozone, Paris slumped by 2.9 per cent and Frankfurt by 2.6 per cent. Meanwhile, London’s benchmark FTSE 100 index shed 1.5 per cent.

Asian equities also fell again after US President Donald Trump’s top coronavirus adviser warned Tuesday that easing lockdown measures too early could spark another dangerous wave of infections and batter any economic recovery.

The S&P/ASX200 benchmark index finished Wednesday up 0.35 per cent.

US Federal Reserve Chairman Jerome Powell. Picture: AFP

“At this stage now, we think there are more risks to the downside than the upside,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “Consumers in general are going to be more wary and more interested in boosting savings rates and are unlikely to come back to a world of consumption anywhere near what it looked like before,” she said.

Originally published as Unemployment: 600,000 Aussie jobs lost in April