Unemployment plunges to 3.5%, with nearly 90,000 jobs added in June

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Australia’s official unemployment rate fell to 3.5%, with around 88,400 jobs added to the economy last month.

This is a sharp drop from the 3.9% unemployment rate seen in the previous three months, and sets a new record unemployment rate since the Australian Bureau of Statistics (ABS) employment count ) became monthly in 1978.

“This is the lowest unemployment rate since August 1974, when it was 2.7% and the survey was quarterly,” said ABS chief labor statistics officer Bjorn Jarvis.

“The unemployment rate of 3.4% for women was the lowest since February 1974 and the rate of 3.6% for men was the lowest since May 1976.”

In other good news for the economy, the drop in unemployment came despite a further increase in the number of people looking for work, with the labor force participation rate hitting a record high of 66.8%.

Even with more job seekers, there were almost as many vacancies (480,000 in May) as people still looking for work (494,000 in June).

Unemployment has fallen in every state or territory except Western Australia and is lowest in the ACT (3.1%), Victoria (3.2%), New South Wales (3.3%) and Western Australia (3.4%, down from 3.1%). in May).

South Australia and Tasmania have the highest unemployment rates in the country, at just 4.3%, with Queensland stable at 4% and the Northern Territory at 3.7%.

Economic log

Unemployment is now at levels where the shortage of available workers is forcing some businesses to curtail operations.

At Ross Transport in Port Kembla, south of Sydney, around 20% of its fleet of 60 trucks are stuck at the depot because there are not enough drivers.

True Ross-Sawrey says his transportation company has at least a dozen vacancies.(ABC News: Adam Griffiths )

“Only tomorrow we could probably take 10 drivers and two mechanics like that,” manager True Ross-Sawrey said.

The family business, which has existed since 1975, has never had so much trouble finding staff.

“Having trucks parked in the yard just throws money down the drain,” Ms Ross-Sawrey added.

She is one of many business owners offering higher salaries to attract and retain staff.

“We normally make increases each year of 3%,” Ms. Ross-Sawrey said.

The company transports items such as building materials and non-refrigerated cargo across eastern states.

Ms Ross-Sawrey said transport staff shortages are one of the factors behind supply chain issues.

“It just means the ability [freight] that we can take each day is significantly reduced,” she explained.

“So people are waiting longer to get their products, which obviously affects our customers and ultimately the consumer.”

Coming out of retirement

The extremely tight labor market and the prospect of higher wages, combined with the rising cost of living, means that more people like Rosemarie Paglinawa, 66, are returning to work.

A woman wearing a mask, gloves and a plastic apron sorts carrots.
Rosemarie Paglinawan recently joined the squad.(ABC News: John Gunn)

Ms. Paglinawa re-entered the workforce with the help of a recruitment agency after two years away following back and shoulder surgery.

“I’m really excited to come to work every day, because I really enjoy it,” Ms Paglinawa said.

Ms. Paglinawa works about 22 hours a week at Value Fresh preparing fruits and vegetables.

The 66-year-old has some advice for others considering returning to work.

“For those who are injured or have stopped working, my advice is to get back to work so your strength comes back and you get some exercise,” she said.

“You will not grow old.

Its boss, Hellen Swirski, said it had never been harder to find staff.

The company currently has around five vacancies and is also struggling to retain workers in a competitive job market.

A blonde woman wearing glasses.
Hellen Swirski, head of Value Fresh, called on recruitment agency atWork Australia to hire Rosemarie Paglinawan. (ABC News: John Gunn )

“With the pandemic it’s on, you know the floods now, people can’t even get to work,” Ms Swirski said.

Ms Swirski believes increased overseas migration will be key to solving the labor shortage plaguing many businesses in Australia.

“The overseas migration that was here, I think has something to do with not being able to find enough workers,” she said.

Bad news for mortgage borrowers

Apart from confirming a severe labor shortage for businesses, the only obvious negatives in the data were a slight rise in underemployment – ​​from a post-global financial crisis low of 5.7% to 6.1% – and a very slight decrease in hours worked.

Mr Jarvis said the drop in hours worked was mainly due to the latest COVID-19 Omicron wave and a larger winter flu outbreak than recently.

“The [were] around 780,000 people working fewer hours than usual due to illness in June 2022, almost double the usual number we see at the start of winter,” he observed.

The other downside to the numbers will be for borrowers: economists say it makes another half-percentage-point rate hike even more likely when the RBA meets again on the first Tuesday in August.

“The labor market is now tighter than expected by the RBA at any time in 2022, posing an upside risk to their wage and inflation forecasts,” noted analyst BIS at Oxford Economics, Sean Langcake.

If that happened, it would make three 50 basis point rate hikes in a row, with the spot rate target rising from emergency lows of just 0.1% in early May to 1.85% in early August.

A few analysts, such as Deutsche Bank’s Phil Odonaghoe, expect the RBA to be even more aggressive.

“In light of the pace of the US CPI in June and the Bank of Canada’s surprise decision to raise rates by 100 basis points overnight, we reiterate our call for a 75 basis point hike from the RBA at the August meeting.”

That would mean a total of 2 percentage points in rate increases in the four months since the RBA made its first move in May.

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