Dr Brendan Rynne, Chief Economist comments on the latest ABS Labour force data
The latest ABS Labour Force data confirmed the anecdotal evidence that we have all been witnessing that the Australian economy started to recover during June.
More than 210,000 people were employed between May and June; the single largest monthly increase in employment since the current Labour Force survey began in 1978. Australia has also seen consistent with this rise in employed persons a spike in the number of hours worked over the past month; some 64 million more hours were worked across the nation in June than in May.
Despite this increase in the number of people working, the national unemployment rate also rose from 7.1 percent to 7.4 percent as a consequence of the labour force expanding by 280,000.
The loss of employment remains relatively balanced between genders, with around 4 percent less male and female workers today compared to 12 months ago.
While these are a “beautiful set of numbers” we already know this rebound in employment is not likely to last into July because of the re-imposition of lockdown restrictions in Melbourne and the specific responses we are now seeing in NSW associated with the roadways cluster.
The Weekly ATO Payroll data has started to show this reversal in fortunes. Between the middle of June – which is the period in which the Labour Force Survey is conducted – and the end of June total payroll numbers declined 0.8 percent across Australia; which incorporates a 1 percent fall in Victoria. We know from recent history that it can take several weeks for employment losses to peak following the implementation of stage 3 lockdowns as businesses evaluate the costs and benefits of remaining opening or closing for the duration of the increased quarantine measures.
This means employment is likely to be rolled back to levels similar to the last lockdown, and the associated economic gains that have accrued are also likely to evaporate to a large extent. KPMG’s analysis of the Victorian ATO payroll data and the value of the economic output generated on an industry-by-industry basis across the state suggests the gains that have been clawed back from the peak of the downturn (in April) are worth around $2.2bn per quarter and involve about 88,000 jobs. To the extent the lockdown is extended or expanded then the economic losses will be materially more than this amount.