Australia’s unemployment rate jumped to the highest in about two decades in May as nearly a quarter of a million people lost their jobs due to the coronavirus pandemic-driven shutdowns.
FILE PHOTO: People are silhouetted against the Sydney Opera House at sunset in Australia, November 2, 2016. REUTERS/Steven Saphore
Employment in May plunged a further 227,700 after a record slump of about 600,000 in April, figures from the Australian Bureau of Statistics (ABS) on Thursday showed.
The unemployment rate shot up to 7.1%, the highest since October 2001, from an upwardly revised 6.4% in April and broadly in line with economists’ expectations in a Reuters poll.
The figures highlight the economic damage wrought by the pandemic as mobility restrictions forced the business to down shutters since late March.
“Although it’s early days, there are signs that May will be the worst month for the labor market,” said Sarah Hunter, chief economist for BIS Oxford Economics, pointing to an improvement in job advertisements.
“But the scale of the job losses means it will likely be years before the labor market has fully recovered.”
The ABS said the jobless rate would have been even higher at 11.3% were it not for a government wage subsidy scheme that allowed businesses to keep staff on their payrolls.
As a result, fewer people went looking for work, sending the participation rate to 62.9% from 63.6% in April.
The number of employees who worked fewer hours or no hours at all fell to 1.55 million from 1.8 million in April, with those working zero-hours halving to 360,000
Australia is facing its first recession in nearly three decades with the country’s central bank predicting the jobless rate to hit 10% by June and stay elevated through 2021.
The Reserve Bank of Australia (RBA) has gone all-in by cutting rates to a record low of 0.25%, flooding the financial system with cash, and even buying government bonds to lower borrowing rates for business.
“It’s possible the unemployment rate won’t rise much further though we suspect a rebound in the participation rate will keep it elevated for a while yet,” Marcel Thieliant, senior economist at Capital Economics, wrote in a note.