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‘Australia’s unemployment rate officially begins with a ‘3.’
Australia Unemployment rate: 3.9%
It hasn’t begun with a ‘3’ for 48-years.
Great news – the rate for previous 20-years has hovered between 5-6 %.
(South Australia: 4.5 % - but below historic averages.) (1)
And the April unemployment rate looks ‘real’ – and not driven down by lots of people leaving the labour force:
‘In April, hours worked increased 1.3%, or 23m hours, to 1.833bn hours, while the participation rate that gauges the share of those of working age in the workforce or seeking jobs, eased back o.1 percentage points to 66.3% but remained near historic highs.’ (2)
There are now 420,000 unfilled job vacancies – twice the number before the pandemic. (3)
Further unemployment rate declines are expected.
The Reserve Bank is forecasting unemployment of 3.6% by 2023, a few points less than the Treasury, which is forecasting 3.75%. (4)
Australia isn’t alone.
The unemployment rate is below 4% in the United States, the United Kingdom, and New Zealand; and below 3% in Japan, Germany, and Korea.
(In the US, ‘positions are now so readily available, that 25 % of candidates don’t turn up for interviews – even if they’re offered cash to attend.) (5)
So, what can stop the jobs party?
Inflation
At 5.1%, Australia’s inflation rate is lower than in other developed economies.
However, everyone is feeling the pressure.
‘Joining co-ops, quitting the gym, and growing vegetables for the first time: Australians are finding new ways to save money and beat soaring inflation.
From electricity to petrol and food, the cost of living is rising steeply, and with the months ahead unlikely to offer a reprieve, Australians are looking at ways to ease pressure on their household budgets.’ (6)
One worker in Melbourne reports:
‘I quit the gym, I decided to ride my bike everywhere, and I also don’t want to pay for public transport
I watch my colleagues drink coffee at break time. I’m just not going to do it – it costs too much money long term.’ (7)
A recent report by the Australia Bureau of Statistics that almost 40 % of Australian companies plan to raise prices in the next three months – most blaming rises in the price of raw materials. (8)
(And that’s without considering ‘shrinkflation:’
Five fewer chips in each bag of doritos.
Five fewer tissues in a box of Kleenex.
Smaller Mars Bars (although the manufacturer says this is due to public health considerations.
KFC using cabbage – instead of lettuce which is more expensive.) (9)
The dangers are clear.
Inflation is fundamentally too much money chasing fewer goods and services. And the remedy is to raise interest rates to dampen things down (and interest rates are rising in Australia). This means it’s costly for companies to borrow to invest and spend – placing higher burdens on government to service huge debt. (10)
China – Zero COVID Strategy
Chinas economic growth has slumped this year – and with one third of Australia trade being with China, the impact on Australian jobs of downturns there could be huge. (11)
Dozens of cities across China and hundreds of millions of people have been placed under lockdown which has had a major impact on global supply chains.
‘Chinas recent economic activity has contracted sharply as a wave of lockdowns across the country posed significant challenges to growth. Smaller and medium sized businesses have been the worst hit – with a recent survey by Peking University finding 40 % had insufficient cash to last a month. (12)
However, the approach China is using to contain the virus is changing.
COVID testing booths are being built in towns and cities – residents having to take a test every three days. The results of the test are reported on a mobile – app. If a test is positive – or three days go by without a test – the person is unable to go to work or visit public places.
The impact of this approach (designed to reduce full city lockdowns), remains to be seen. This new ‘dynamic’ approach to containing the virus could have an uncertain but profound impact on economic activity.
This week, the World Bank names China, the war in Ukraine and supply chain disruption as being the main factors behind its decision to cut global GDP growth for 2022 down to 2.9 % - down from an actual figure of 5.7 % in 2021. (13)
In any event, uncertain developments in China are a threat to the Australian economy.
So, welcome to Australia’s jobs party. Let’s hope the hangover isn’t too bad.
At 3.9 % Australia’s unemployment rate now officially begins with a ‘3,’ The Conversation, 19 May 2022
Australia’s jobless rate at 50-year low of 3.9% but fewer positions added in April than predicted, The Guardian, 19 May 2022
Close to 3% of jobs vacant in March quarter, Australia Bureau of Statistics, 8 June 2022
At 3.9 % Australia’s unemployment rate now officially begins with a ‘3,’ The Conversation, 19 May 2022
Inflation, a ghost at the jobs party, Sunday Times, 12 June 2022
Cost of living: how to beat Australia’s soaring inflation and cut your everyday expenses, The Guardian, 6 June 2022
Cost of living: how to beat Australia’s soaring inflation and cut your everyday expenses, The Guardian, 6 June 2022
Business Conditions and Sentiment, Australia Bureau of Statistics, 26 May 2022
Inflation, a ghost at the jobs party, Sunday Times, 12 June 2022
Reserve Bank hikes official interest rate by 50 basis points to 0.85% to curb inflation. The Guardian, 7 June 2022
See Australia Government, China Country Brief
Chinas Economic Activity Plummets as COVIS Lockdowns Grow, Financial Times, 16 May 2022
The Cost of Chinas Zero-COVID Strategy is Mounting, Financial Times, 11 June 2022