Australia’s economy, jobs market looks set for another remarkable rebound as lockdowns lift

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If you had to personify Australia’s labour market at the moment, it would look and sound a lot like the Black Knight of Monty Python fame.

Lock down the nation’s biggest city for more than a hundred days? “‘Tis but a scratch.”

Put the second largest city into lockdown for the sixth time? “It’s just a flesh wound.”

Add in the nation’s capital, plus lockdowns across regional NSW and Victoria over recent months? “I’m invincible.”

Despite missing several of its limbs for weeks on end, Australia’s economy remains defiant.

Unemployment rose in September, but only to 4.6 per cent. Other than the previous month’s 4.5 per cent, it’s the lowest figure the ABS has recorded since the global financial crisis of 2008.

However, like the Black Knight, the wounds to Australia’s jobs market are significant.

An estimated 138,000 people lost employment last month, on top of 146,000 the month before that.

The only reason that official unemployment remains so low is that 333,000 people gave up looking for work over the three months to September — hardly surprising given that for many people their occupations have been temporarily regulated out of existence due to public health orders.

AMP Capital senior economist Diana Mousina says, when you factor in those people as well as others employed but working zero hours, the effective unemployment rate last month was around 7.6 per cent.

That sounds terrible, and is, but it isn’t as bad as the 14.9 per cent effective unemployment rate seen when the whole nation was locked down from the end of March last year.

“The fall in employment hasn’t been as large compared to 2020 because not all the states and territories have been in a prolonged lockdown, COVID-19 is less of an unknown, re-opening plans (based on projected vaccination rates) gave businesses a plan which assisted with staff retainment and government payments have again come to the rescue in supporting incomes,” Ms Mousina notes.

Job losses not as bad as feared

Even so, many economists had feared much worse, especially in the absence of JobKeeper.

CBA’s head of Australian economics Gareth Aird was one of them.

He says there are now signs that, not only has the damage during the lockdowns been smaller than expected, the rebound in employment should be robust as restrictions lift.

“Job vacancies have held up well during the lockdowns,” he said.

“Our expectation at this stage is that employment will post a small negative in the October labour force survey, followed by a bounce of around 150,000 in the November report. Another strong outcome is anticipated in December as Victoria reopens.”

With NSW largely reopening this week, you may wonder why the October employment numbers are expected to be weak.

That’s because the Bureau of Statistics’s reference period for those figures ended on October 9, so all the retail, hospitality, recreation and personal service staff coming back to work on October 11 won’t be counted as employed for that month.

It’s another statistical quirk that means the monthly jobs figures won’t paint a timely full picture of what’s happening in the economy.

But many of those workers also won’t yet be counted as back in the labour force and, by the time they are in November, they will likely already be back in work.

“It now looks likely that the unemployment rate will have remained below 5 per cent during the lockdown period,” says Gareth Aird.

“Indeed, it is possible that the jobless rate will retain a 4 handle on it as NSW and Victoria exit lockdown. Such an outcome would bode very well for a lift in wages growth over 2022.”

So, while Australia’s labour market may share many things in common with the Black Knight, it seems like it does possess a genuine ability to regrow its limbs and fight on.

By business reporter Michael Janda (Original ABC Article)