Australia’s unemployment rate jumped to 7.1 per cent in May from 6.4 per cent in April, with the Bureau of Statistics estimating a further 227,700 jobs were lost last month.
The loss in jobs was much larger than the 100,000 typically forecast by economists, and the unemployment rate would have jumped much higher still without another big fall in people looking for work.
The participation rate surprised by slumping a further 0.7 percentage points to 62.9 per cent, the lowest level since January 2001.
To be counted as unemployed by the ABS you must be actively looking and available for work.
“The drop in employment, of close to a quarter of a million people, added to the 600,000 in April, brings the total fall to 835,000 people since March,” said Bjorn Jarvis, the head of labour statistics at the ABS.
“In two months, the percentage of people aged 15 and over employed in Australia decreased from around 62.5 per cent to around 58.7 per cent.”
The full weakness in the jobs market is also captured by a record underutilisation rate of 20.2 per cent, which combines the unemployed and underemployed.
“The ABS estimates that a combined group of around 2.3 million people — around one-in-five employed people — were affected by either job loss between April and May or had less hours than usual for economic reasons in May,” added Mr Jarvis.
Responding to the figures, Prime Minister Scott Morrison told reporters he was not surprised by the scale of the job losses and attributed them all to the effects of the pandemic.
“Coronavirus is the reason people have lost their jobs,” he said.
“And it will take us, we estimate, around two years to get back to where we were before it happened, and we think over five years we can seek to catch up to where we were planning to be.”
However, Labour’s Shadow Treasurer Jim Chalmers accused the Government of contributing to an unemployment rate that would appear far higher if 623,000 people had not given up looking for work over the past two months.
“If they were still in the labour market, the unemployment rate would be more like 11.3 per cent,” he told reporters.
“The unemployment queues are longer than they need to be because the Morrison Government has bungled the JobKeeper program.
“They have left too many people out. They have left too many people behind. And we see that in the numbers today.”
Mr Chalmers said he was also disturbed to read reports that the Government is considering winding up JobKeeper earlier than its current September cut-off date.
“They are talking about fast-forwarding people out of work and onto welfare. It makes absolutely no economic sense whatsoever.”
Women and youth hit hardest
These job losses and working hour reductions were also unevenly distributed across the population.
“Female employment fell by 118,000, making up 52 per cent of the jobs lost in the month of May,” noted Treasurer Josh Frydenberg at the press conference with the Prime Minister.
“Youth employment fell by 103,000, making up 45 per cent of those jobs lost in May.”
The youth unemployment rate, for 15-24-year-olds, jumped a further 2 percentage points over the month to be sitting at 16.1 per cent.
The Prime Minister said getting those young people back into work was one of the Government’s key priorities.
“Young people, they have been most affected in these numbers,” Mr Morrison acknowledged.
“But my hope is that, equally as [the] economy opens up, they will hopefully also be the first to benefit from [the] economy opening up.
“As retail doors open again, as food courts are open again, as shopping centres are fuller again, we hope to see more of those young people back into work.”
‘Wasn’t all doom and gloom’
However, Commonwealth Bank senior economist Gareth Aird said the bank’s customer data showed the number of people receiving JobSeeker payments into their accounts peaked late last month, meaning that the May jobs figures should be the low point for employment.
“We do not believe another 228,000 people lost their jobs in May,” he explained.
“Instead we think many people who lost their jobs in April were counted as employed in April but were not considered employed in May.
“In other words, the bulk of the job losses and deterioration in the labour market took place in April, but some of it being accounted for in May.”
Capital Economics analyst Marcel Theliant agreed “it wasn’t all doom and gloom”.
“The number of employees who worked fewer hours or no hours at all fell from 1.8 million to 1.55 million, with those working zero hours halving to 360,000.
“As a result, hours worked fell by just 0.7 per cent month-on-month, much less than the 9.5 per cent plunge in April.”
Both job ads data and more up-to-date ABS payroll figures appear to show job losses bottoming out.
Figures from Seek show job ads surged 39.7 per cent in May compared to April, although they are still down more than 50 per cent on the same time last year.
The ABS payroll figures, compiled from Tax Office data, also show that some jobs have come back since a low point in the week of April 18.
At that point, 8.9 per cent of jobs on payroll had gone since coronavirus shut-downs ramped up in mid-March but the latest figures up to the end of May, released this week, showed that decline had lessened to 7.5 per cent.
“Payroll jobs in the accommodation and food services industry increased by 5 per cent through May, but remained 29.1 per lower than in mid-March,” Mr Jarvis noted in that report.