Surprise fall in national jobless to 12-year low

Unemployment unexpectedly dropped to 4.6pc in July despite NSW lockdowns, as Victoria led employment gains.

As Australians race to get vaccinated, the job losses from Delta lockdowns will get worse. Picture: Damian Shaw

Unemployment unexpectedly plunged to a 12-year low of 4.6 per cent in July, despite the start of Greater Sydney’s lockdown triggering tens of thousands of job losses in NSW and as economists warned of worse to come.

A brief rebound for the Victorian labour market between lockdowns in the first half of the month, alongside strong jobs gains in South Australia and Western Australia, drove employment nationally up by 2200, seasonally adjusted figures from the Australian Bureau of Statistics showed.

Full-time employment nationally fell by 4200 last month, outweighed by a 6400 lift in part-time employment. A drop in the participation rate from 66.2 per cent to 66 per cent amplified the drop in the headline jobless rate, which was measured at a decade-low of 4.9 per cent in June.

 

The surprise labour force result compared with the consensus forecast among bank economists that 43,000 jobs would be shed nationally, and that unemployment would tick higher to 5 per cent – although experts in the wake of the data warned the full impact of restrictions was yet to be captured in the official statistics.

EY chief economist Jo Masters said “this is just the start of the pain that is sure to come”.

“The picture in August and September will look much different,” Ms Masters said. “While businesses are likely to try and adjust through hours worked, we expect job losses alongside rises in the unemployment and underemployment rates.”

With businesses shuttered and many employees stood down, economists are expecting up to 300,000 job losses will be recorded over coming months, and for unemployment to climb above 5.5 per cent.

The ABS survey covered the two weeks to July 11, when Greater Sydney was enduring a milder lockdown and before the construction sector was paused for 14 days. Even so, NSW recorded a 36,400 drop in employment in July, or 0.9 per cent, and a 7 per cent drop in hours worked – a better reflection of the even larger number of workers stood down due to forced business closures.

In NSW, the participation rate fell by a massive one percentage point to 64.9 per cent, as workers abandoned the labour force.

The survey period also captured Victoria enjoying a false dawn of easing Delta restrictions ahead of the state’s fifth lockdown from July 15. The number of employed Victorians climbed by 16,000, while monthly hours worked surged 9.7 per cent after plunging by nearly that much in June.

South Australian employment climbed by 10,600 in July; Western Australia added 6500 jobs.

In Queensland, the only other state to shed jobs, employment fell by 6600, or 0.2 per cent.

Josh Frydenberg said the lowest unemployment rate since 2008 would normally be cause for celebration, but that millions of Australians were in lockdown overshadowed the positive headline figures.

 

The Treasurer said the strong lift in employment in Victoria and a 9.7 per cent surge in hours worked in the first half of July was further evidence of the “impressive resilience” of the economy to bounce back from restrictions.

But with lockdowns across NSW, Victoria, ACT and the Northern Territory now costing the national economy about $2bn a week, according to Treasury estimates, Mr Frydenberg said there was “no doubt” GDP would contract in the September quarter – potentially by more than 2 per cent – and it was “too early to speculate” whether the economy would grow in the December quarter and so avoid its second recession in as many years.