Australian Unemployment Climbs to 6.9% Amid Melbourne Drag
Australian unemployment climbed in September -- though by less than expected.
(Bloomberg) --
Australian unemployment climbed in September -- though by less than expected -- as Victoria state’s lockdown dented a recovery that’s been spurred by an improving economy in the rest of the country.
The jobless rate advanced to 6.9% from 6.8% in August versus economists’ median estimate of 7%, data from the statistics bureau showed Thursday in Sydney. Employment declined by 29,500 in September, ending a three-month expansion, compared with an expected 40,000 loss. The participation rate declined to 64.8%.
The Australian dollar was little changed at the time of the release, and traded at 71.33 U.S. cents at 1:46 p.m. in Sydney.
The data reflect Melbourne remaining under Stage 4 restrictions and a nighttime curfew during the period as authorities tried to contain a renewed Covid outbreak. The Reserve Bank of Australia predicts Victoria’s lockdown cut economic growth last quarter by at least 2 percentage points and the Treasury sees unemployment peaking at 8% this quarter.
What Bloomberg’s Economists Say
“Australia’s labor market data is a combination of two stories, a virus-stricken Victorian economy in lockdown, and a recovering economy in other regions. While headline indicators paint a weak picture in aggregate, the real story is of an ongoing lift in hours worked across virus-free regions. Significant slack remains, but the underlying picture in September is a better one than the headline aggregates suggest.”
James McIntyre, economist
The RBA has kept its key interest rate near zero since March, when it began a bond-buying program to hold down the three-year yield at around 0.25%. That helps lower borrowing costs across the economy and signals rates won’t rise for an extended period.
The central bank in September also announced an expansion of its lending facility for banks and signaled that it remains open to exploring additional measures to support the economy.
Among other details in today’s jobs report:
- Monthly hours worked rose by 0.5%
- Under-employment edged up to 11.4%, while under-utilization advanced to 18.3%
- The employment-to-population ratio fell 0.2 percentage point to 60.3%, and was down 2.4 points on the same time last year
- Full-time jobs fell by 20,100 and part-time roles dropped 9,400
“The September data provides further insights into the labor market impacts from the Stage 4 restrictions in Victoria,” said Bjorn Jarvis, head of labor statistics at the ABS. “Employment in Victoria decreased by 36,000, following a fall of 37,000 in August.”
In contrast, Queensland and South Australia saw the largest job gains, reflecting those states’ success in controlling the virus that has allowed a further relaxation of social restrictions.
RBA Governor Philip Lowe highlighted in a speech earlier Thursday that there have been reports of some labor shortages in the mining powerhouse of Western Australia, where borders remain shut to the rest of Australia.
Victoria, Australia’s second most populous state, is now beginning to ease its strict lockdown as new virus cases fall.
Lowe also said the RBA is working through how much traction any further easing will gain, the potential effect on financial stability of such a move, and what international counterparts are doing before taking any new policy steps.
The governor noted the uneven way the pandemic has affected different industries.
“The hospitality industry -- in which many young people and women work -- has been worst affected, with almost 300,000 job losses between February and May,” Lowe said. “There has been an encouraging recovery of late, and for this to be sustained our economy will need to open up further.”
He made it clear that employment is at the front-and-center of the central bank’s thinking.
“In terms of unemployment, we want to see more than just ‘progress towards full employment,’” Lowe said. “We want to see a return to labor market conditions that are consistent with inflation being sustainably within the 2% to 3% target range.”
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