Australia’s unemployment rate has fallen to 4.6% in July, down from 4.9%, defying expectations the economy would lose jobs due to the greater Sydney lockdown.
In July the Australian economy added 2,200 jobs and the number of unemployed people fell by 39,900, but the Australian Bureau of Statistics has warned the falling unemployment rate is not a sign of a strong jobs market.
Most of the improvement in unemployment was driven by a decrease in the participation rate from 62.2% to 62%, as people dropped out of the labour market.
Figures released by the ABS on Thursday reveal that 3m fewer hours were worked in July, down to 1,778m, and underemployment increased by 0.4 percentage points to 8.3%.
Greater Sydney has been in lockdown since late June, while Victoria’s shorter lockdown in mid-July and sixth lockdown in August have fuelled growing concerns that Australia’s economy will shrink in the final two quarters of 2021.
On Thursday Josh Frydenberg said lockdowns had caused “significant damage” to the Australian economy, and Treasury advice indicates a 2% contraction in the September quarter.
The treasurer told reporters in Canberra it was “too early to speculate” on the December quarter, but noted that the Reserve Bank predicted more than 4% growth in 2022.
Frydenberg said consumer spending and confidence were both 30% higher than in March and April 2020, so the macroeconomic picture, while “challenging”, is better than at the outset of the pandemic.
He also pointed to $290bn of business and household savings, as a potential source of stimulus after coronavirus restrictions ease.
Bjorn Jarvis, head of labour statistics at the ABS, said July saw “big falls in New South Wales in both employment (-36,000) and unemployment (-27,000), with the labour force reducing by around 64,000 people”.
“In addition, hours worked in NSW fell by 7%. These changes offset increases in employment and hours in Victoria.”
Victoria recorded a 9.7% increase in the number of hours worked in July, following the 8.4% fall in June.
NSW’s July 2021 jobs slump is now larger than during Victoria’s second wave lockdown in July 2020, when the latter lost 19,000 jobs in a month.
Frydenberg said that “normally we’d be celebrating that unemployment is at lowest point in 12 years – but today we’re not, because millions of our fellow Australians are doing it tough”.
Nevertheless, he said that figures showed “there is an enormous resilience in our economy”.
The employment minister, Stuart Robert, said that in NSW the number of workers stood down had increased from 13,900 in June to 116,700 in July, driving a national increase from 156,000 to 181,000 despite fewer workers stood down in Victoria. He concluded the jobs figures were “very much a tale of two states”.
Jarvis said it may seem “counterintuitive” that unemployment had fallen but this “reflects the limited ability for people to actively look for work and be available for work during lockdowns”.
“The fall in the national unemployment rate in July should not necessarily be viewed as a sign of strengthening in the labour market – it’s another indication of the extent of reduced capacity for people to be active in the labour market, in the states with the largest populations,” he said.
The Australian Council of Trade Unions president, Michele O’Neil, blamed the Morrison government’s “failed vaccine rollout” for the precarious economic position and jobs uncertainty.
“We’re in lockdown, then out again,” she said. “We need jobkeeper 2 [wage subsidies], to keep workers connected to their place of work, and give them some peace of mind and confidence about the future.”
The number of unemployed people is 84,300 lower than in March 2020, at the outset of the pandemic. Youth unemployment was steady at 10.2%, 1.4% lower than in March 2020.
The ABS also released estimates for average weekly ordinary time earnings for full-time adults, showing a 1.4% increase to $1,737.10 in the year to May 2021, a time when no state was in lockdown.
But average weekly earnings for “all employees” – including casuals and part-time workers – grew by just 0.1% to $1,305.80 in the same period.
