Australia has recorded an unemployment rate not seen since 1974, with surprise figures well above market expectations.
Anthony Albanese’s first full month as Prime Minister coincided with another improvement in jobs numbers at a more dramatic pace than the market expected.
Unemployment fell from 3.9% to 3.5% in June, according to the latest monthly employment figures released Thursday by the Australian Bureau of Statistics.
The underemployment rate – which measures the proportion of employed people who want to work more hours than they currently do – rose 0.3 percentage points to 6.1% in June.
ABS labor statistics chief Bjorn Jarvis said the 3.5% unemployment rate was its lowest since August 1974, when it was 2.7% and the survey on the labor force was published quarterly.
“The 3.4% unemployment rate for women was the lowest since February 1974 and the 3.6% rate for men was the lowest since May 1976,” Mr Jarvis said.
The ABS found that there were 88,000 more people employed and 54,000 fewer unemployed in June compared to May, pushing the unemployment rate down 0.4%.
The market had largely tipped the official unemployment rate from 3.9% to 3.8%.
BIS head of macroeconomic forecasts at Oxford Economics, Sean Langcake, said Australia’s labor market was now tighter than the Reserve Bank had forecast at any time in 2022.
It forecast another 0.50% increase in the official interest rate when the central bank meets next month in light of jobs figures released on Thursday.
Mr Langcake noted that despite the sharp increase in employment during the month, hours worked were unchanged, suggesting there was still a large cohort of people forced to take sick leave due to Covid -19.
“With this staff unavailable, companies could look to hire additional staff to guard against capacity constraints,” he said.
The ABS attributed the sharper-than-expected drop in the official unemployment rate to an increasingly tight labor market, with strong demand for hiring and retaining workers as well as persistent labor shortages. .
The participation rate – people working or looking for work – reached a new record, rising from 66.7% to 66.8%.
Seasonally-adjusted employment rose 88,000, or 0.7%, in June, its eighth consecutive monthly increase since Delta’s shutdowns were eased in the second half of 2021.
The drop in unemployment during the pandemic coincided with a sharp increase in job vacancies, with 480,000 jobs available in May.
This meant there were almost the same number of unemployed in June – 494,000 people – as job vacancies.
Mr Jarvis said that meant there was around one unemployed person per job vacancy, compared to three times as many people before the start of the pandemic.
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