Unemployment looks certain to surge back over 5% when the August labour force data is released next Thursday, after the latest Australian Bureau of Statistics payroll and wages data showed another drop in the first two weeks of August.
The fall of 0.7% was smaller than in the previous two weeks of 1.8% but it is a sign of the weakness in the labour market thanks to the lockdowns in NSW, Canberra and Victoria.
While the lockdowns in regional Victoria eases from today (except for Shepparton, and in some areas of country NSW), the big employment zones of greater Sydney and Melbourne will remain in lockdown for another month or more.
The largest falls in the two weeks to August 14 were in NSW, down 1.2%, followed by Queensland at 1%, with ACT with a 0.7% drop and Victoria with a 0.6% slide.
“These four states and territories had lockdowns for either all or part of the first half of August, in addition to existing restrictions and border closures across the country,” ABS head of labour statistics Bjorn Jarvis said.
Payroll jobs in South Australia rebounded by 1.5% in the first two weeks of August, following the lockdown in late July when payroll jobs fell by 2.0%.
New South Wales and Victoria accounted for more than two-thirds (70%) of payroll jobs lost in the latest fortnight, which is greater than their pre-pandemic share of payroll jobs (58.4% in mid-March 2020).
“Impacts from lockdowns continue to be highly visible in payroll jobs data, particularly when the two largest states are both in lockdown,” Mr Jarvis said in Thursday’s statement.
Reserve Bank Governor Philip Lowe warned in his post RBA board meeting statement that we can expect the unemployment rate wo increase in coming months as the economy takes a hit from COVID-19 lockdowns.
He believes this hit will be ’temporary” and will mean the recovery is uneven and weaker than earlier this year. GDP growth has slowed in the year to June from 3.3% in the September quarter, to 3.1% in the three months to December, 1.9% in the March quarter and 0.7% for the final three months to June 30.
Commonwealth Bank economists expect that the official August labour force data will show around 300,000 job losses with the unemployment rate jumping from 4.6% to 5.2%.
There were also further signs demand for workers is rapidly easing.
Job advertisements posted through the SEEK network dropped 5.3 per cent in August, figures on Thursday showed.
“Perhaps unsurprisingly, states and territories under the strictest lockdowns each saw a decline in job ad volumes,” SEEK ANZ managing director Kendra Banks said in a statement.
Ads in NSW fell 10.7% last month while Victoria saw a 6.3% drop.
NAB expects the economy will contract by 3.5% in the September quarter and return to a positive trajectory in the final three months of the year.
It expects the economy to grow by four per cent in 2022.
Westpac CEO Peter King says his economists expect the economy to contract by 4% in the September quarter, but rebound by 7% over 2022.
The AMP’s Dr Shane Oliver sees a fall of 4% at least this quarter and while he expects the economy to recover in the final quarter of 2021 and into 2022, he doesn’t expect that rebound to be as strong as previously thought.
GDP was up 2.6% in the first half of 2021, so this quarter’s expected contraction of 4% will eat all of that and make it impossible for the 4th quarter rebound – if it happens – to drag the economy back to the 4% growth rate the Reserve bank forecast in August for the full year.
