Australia Unemployment Falls to 6.6% as Recovery Strengthens
(Bloomberg) -- Australian unemployment fell in December as a big-spending government budget and a second round of central bank stimulus spurred the economy’s recovery and encouraged firms to keep hiring.
The jobless rate declined to 6.6% from 6.8% in November, beating economists’ median estimate of 6.7%, data from the statistics bureau showed Thursday in Sydney. Employment advanced by 50,000 in December, matching estimates, as did the participation rate at 66.2%.
The data confirm “Australia’s economy is a relative outperformer,” said Sarah Hunter, chief economist for BIS Oxford Economics. Yet “the disproportionate impact on younger workers, who are more likely to work in the sectors that are still not able to operate normally, is also apparent as the unemployment rate for this group is 2.3 percentage points higher than a year ago.”
Australia’s recovery is bolstered by the authorities’ ability to contain the virus -- even accounting for recent isolated outbreaks -- boosting confidence and encouraging cashed-up households to spend. That’s prompted firms to resume hiring and Australians to return to the labor force, tempering the impact on unemployment as participation swells.
Among other details in today’s jobs report:
- Monthly hours worked increased by 0.1% in December, while declining by 1.5% over the year
- Under-employment fell by 0.8 percentage point to 8.5% and under-utilization decreased by 1.1 percentage points to 15.1%
- Full-time jobs advanced 35,700 and part-time roles gained 14,300
What Bloomberg Economics Says...
“Australia’s unemployment rate may have peaked as the labor market continues to heal from the damages wrought by the pandemic. Labor force participation hit a record high in December, as employment and hours worked recovered further.”
-- James McIntyre, economist
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The Australian dollar was little changed after the release and traded at 77.74 U.S. cents at 1:51 p.m. in Sydney.
Unemployment fell the most in the island state of Tasmania, dropping 0.9 percentage point to 7%. It also declined significantly in Victoria, with jobs recovering following its second lockdown. Indeed, the only state to record a rise was South Australia.
“Although employment has recovered 90% of the fall from March to May, the recovery in part-time employment has outpaced full-time employment,” Bjorn Jarvis, head of labor statistics at the ABS, said in a statement. “While part-time employment was higher than March, full-time employment was 1.3% below March.”
The Reserve Bank of Australia in November cut interest rates and its three-year yield target to 0.10% and initiated a quantitative easing program to lower borrowing costs across the economy and help contain the currency. That came on the heels of the government announcing tax cuts, incentives for firms to invest and hire and infrastructure projects to boost activity.
The RBA aims to return inflation to its 2-3% target. Yet, achieving this requires faster wages growth, which is unlikely unless the unemployment rate falls.
Fourth-quarter inflation data will be released on Jan. 27 and the central bank’s board convenes for its first meeting of the year on Feb. 2.
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