Australia created 111,000 new jobs in August, pushing unemployment down to 6.8%.The figures show most Australian states have grown as they have reopened their economy, but Victoria continues to drag as Melbourne remains in hard lockdown.Meanwhile, two-thirds of new jobs were part-time and actual hours worked increased just 0.1%, indicating plenty of Australians are still struggling with underemployment.
Victorians might still be under firm lockdown, but other state economies are doing the heavy lifting in getting Australians back to work.
Some 111,000 jobs were created in August, pushing unemployment down to 6.8% in August, according to the latest ABS figures, down from 7.5% in July.
“Despite weakness in Victoria, the opening up in other states more than offset this with employment beating expectations materially, a good outcome and perhaps if trends continue – a big if – the RBA forecast of 10% unemployment by year’s end may be too high,” IFM Investors chief economist Alex Joiner said.
Principally, it was the other eastern seaboard economies that are again producing jobs. In July, 8.8% of Queenslanders and 7.2% of New South Welshmen were unemployed. Fast forward a few weeks and both fell to 7.5% and 6.7% apiece.
However, like with all the employment data during the pandemic, things are a lot more complicated when you take a peek under the hood.
With two in three new jobs being part-time, Australia hasn’t been able to shift the dial on underemployment – that is, Australians who want more work but can’t find it. It remains stuck at 11.2%, while the fact that 200,000 people have simply given up on finding work altogether belies the true state of the economy.
Meanwhile, the number of total hours being worked across the country – a more reliable barometer of the current state of affairs – rose a measly 0.1%. Hardly something to write home about.
Certainly, the reality in Victoria is far from rosy. https://platform.twitter.com/embed/index.html?creatorScreenName=%40jack_derwin&dnt=true&embedId=twitter-widget-0&frame=false&hideCard=false&hideThread=false&id=1306408467012313088&lang=en&origin=https%3A%2F%2Fwww.businessinsider.com.au%2Funemployment-has-fallen-to-6-8-as-most-states-see-a-bounce-but-australia-isnt-out-of-the-woods-just-yet-2020-9&siteScreenName=BIAUS&theme=light&widgetsVersion=219d021%3A1598982042171&width=500px
Labour market conditions diverged in August for Victoria and the rest of Australia. In Victoria, employment is down 5.5% compared with March, whereas for the rest of Australia the decline is 2.4% #ausbiz #auspol @IndeedAU pic.twitter.com/ZEW7guTtxA
— Callam Pickering (@CallamPickering) September 17, 2020
“Despite the positive employment print the impact of restrictions in Victoria is clear. Total hours worked, which strips out the distortions created by JobKeeper and JobSeeker, was essentially flat on the month and is 5.1% lower than a year earlier,” Sarah Hunter, chief economist at BIS Oxford Economics, said in a statement issued to Business Insider Australia.
“The 4.8% fall in hours worked in Victoria broadly offset the 1.8% increase in other parts of the country.”
Meanwhile, the number of Australians essentially relegated to the sidelines of the economy, either who have dropped out of the workforce or who aren’t getting enough hours, means the economy has a long way to go before it gets back to pre-pandemic levels.
“This much spare capacity in the labour market will weigh heavily on wages growth for at least the next year,” Hunter said.
In sum, it means that the labour market isn’t nearly as steady as the unemployment rate might suggest, a worry for both those still in it or those who have been shoved out entirely.
Remember, that’s with JobKeeper effectively picking up a good chunk of the wage bill for employers anyway. With designs to taper it back this month and eliminate it entirely by March, the Australian labour force looks like it has a long way to go before it can stand on its own two feet.
“The Australian economy has effectively been held together by these payments, which have isolated both businesses and households from the economic damage from COVID-19. Their reduction could certainly prove disruptive for households and businesses across the country, particularly those in vulnerable sectors or regions,” Indeed Asia-Pacific economist Callam Pickering said.
“While this labour force survey is certainly positive, easily exceeding expectations, we are not out of the woods yet.”
Jack Derwin