Coronavirus: reduced aid ‘led to fall in jobs’

The first major tapering of JobKeeper payments appears to have contributed to further fall in employment, casting doubt on Australia’s economic rebound.

‘We are left searching for answers as to why payroll jobs have declined so sharply in a broad-based fashion over the past four weeks’: Commonwealth Bank senior economist Gareth Aird.

The first major tapering of the government’s JobKeeper payment appears to have contributed to further fall in employment, casting doubt on the likelihood of a strong economic rebound.

The total number of jobs ­nationwide fell 0.8 per cent over the 14 days to October 17, the ABS said on Wednesday, falling in every state and territory even though the strictest coronavirus restrictions on businesses and households, outside Victoria, were lifted months ago.

“This is both a bad and surprising result,” said Commonwealth Bank senior economist Gareth Aird. “We are left searching for answers as to why payroll jobs have declined so sharply in a broad-based fashion over the past four weeks,” he added.

Employment fell 0.4 per cent in Victoria in the fortnight, 0.6 per cent in Queensland, and 1.3 per cent in NSW for the two-week period, more than in any other state.

The Australian Bureau of Statistics said the number of jobs was 4.4 per cent, or 470,000 lower, than in mid-March when coronavirus restrictions began.

“The accommodation and food services and arts and recreation services industries have suffered the largest losses in payroll jobs during the COVID-19 period. By 17 October, these industries remained 18 per cent and 15 per cent lower than mid-March,” said Bjorn Jarvis, head of labour statistics at the ABS.

JobKeeper payments reduced from $1500 to $1200 on September 28, with part-time workers on a lower rate of $750 ahead of a further scaling back of the program due in January.

Goldman Sachs chief economist Andrew Boak said the “step down in the JobKeeper wage subsidy may have contributed to the decline but we are mindful the data tend to be revised up over time and exclude sole traders”.

Separately, the ABS said retail spending, which fell in all states and territories except Northern Territory, shrank 1.1 per cent in September compared to a month earlier. After a 12.6 per cent drop in August in Victoria, retail trade fell a further 0.4 per cent in September.

“Although containment measures were in place in Victoria for most of Oct­ober, there was easing of some more stringent restrictions and we would expect it to rebound slightly in October, followed by an even bigger rise in November,” said Citi economist Faraz Syed.

“The strong pick-up in cafes, restaurants and takeaway food services, where spending is above pre-COVID levels in WA and Queensland … suggests consumers are not as scarred by the pandemic as first feared,” Nat­ional Australia bank economist Tapas Strickland said.