Australia back to pre-virus employment
Australia is one of the first nations to regain all jobs lost through the pandemic, reflecting a successful early suppression of COVID-19 and a massive fiscal-monetary shot that’s sent the economy roaring back.
Employment and hours worked in March were higher than in the same month of 2020, government data showed in Sydney Thursday. Unemployment in Australia fell to 5.6% last month — exceeding economists’ estimates — despite the participation rate climbing to a record high 66.3%.
The result highlights the profound connection between the health of a nation and its economy as Australia has limited community transmissions of COVID-19 to isolated flare ups. It also suggests the U.S. and U.K., where vaccination programs are in full swing, are set to see a roaring recovery.
“It’s probably time to stop using the word ‘recovery’ when referring to the state of the Australian economy,” said Gareth Aird of Commonwealth Bank of Australia. “The domestic economy is now simply in expansion mode. There is still an output gap, but we expect the level of GDP in Q1 21 to be above its pre-covid high given the big lift in employment and hours worked.”
Like Australia, South Korea is back at March 2020 employment levels; however, its labor market was already deteriorating prior to that so the comparison isn’t strictly equal. New Zealand has likely returned to pre-COVID employment, but quarterly jobs reports mean the latest data are from the final three months of 2020.
It’s unclear whether China, one of the earliest nations to suppress COVID-19 and to recover economically, has been able to meet or exceeded its pre-virus employment levels.
Sentiment Down Under is surging as cashed-up households are encouraged to spend and firms consider investing. That’s prompted increased hiring and Australians to resume job-hunting, swelling the labor force and further strengthening the economic outlook.
Among other details in the jobs report:
n Monthly hours worked increased by 2.2%.
n Full-time jobs fell by 20,800 and part-time roles soared by 91,500.
n Western Australia’s recovery from a lockdown in the first week of February was reflected in a 2.4% increase in employment, and a 9.2% jump in hours worked.
Western Australia, which shut its borders from the rest of the country for an extended period during 2020, recorded an unemployment rate of just 4.8% — the lowest in Australia. This was despite the participation rate surging to 68.4%, more than 2 percentage points above the national level.
Australia’s central bank in February forecast the jobless rate would
“It’s probably time to stop using the word ‘recovery’ when referring to the state of the Australian economy. The domestic economy is now simply in expansion mode.” — GARETH AIRD OF COMMONWEALTH BANK OF AUSTRALIA
fall to around 6% by the end of this year and 5.5% at the end of 2022, a level its already closing in on. Under an optimistic scenario for unemployment, the rate would drop to 4.75% by the end of next year. The RBA is due to release updated forecasts next month.
Meantime, sentiment reports this week showed an index of business conditions soared to a record high — with hiring intentions strong — and consumer confidence jumped to the highest since 2010.