Thursday, March 30, 2023

Australia June Unemployment Hits 10-1/2-Year Low

Australia June Unemployment Hits 10-1/2-Year Low

Australia’s unemployment rate hit its lowest in more than a decade in June, yet another sign of the country’s remarkable economic recovery from the coronavirus pandemic and an outcome likely to bring forward the date of monetary policy tightening.

Thursday’s data from the Australian Bureau of Statistics (ABS) showed 29,000 net new jobs were created in June, in line with forecasts for a 30,000 gain and on top of a whopping 115,100 in May. The increase was entirely led by full-time jobs which jumped by 51,600.

Unemployment dropped to 4.9%, from 5.1% in May. This is the lowest it has been since December 2010, extending a recovery from a high of 7.5% hit last July when lockdowns aimed at stopping the spread of COVID-19 tipped the economy into recession.

“The upshot is that wage growth should start to accelerate in earnest before long, prompting the RBA to tighten policy by early-2023,” said Marcel Thieliant, an economist at Capital Economics.

The Reserve Bank of Australia (RBA) slashed interest rates three times last year to a record low of 0.1% and announced a massive bond-buying program to help push borrowing costs down.

Earlier this month, it said it would slow the pace of its bond purchases to A$4 billion a week from September from A$5 billion currently, reflecting the recovery in the labor market.

Thursday’s strong figures come despite a two-week lockdown in Melbourne, Australia’s second-most populous city, in June.

The Aussie dollar barely reacted to the figures to be last at $0.7464 amid fears a lockdown in Sydney, Australia’s biggest city, could shrink the economy and hit overall jobs momentum.

The Sydney cluster now stands at over 900 cases with two deaths, the first for the country this year.

Economists fear the five-week lockdown, currently due to end on July 30, will be extended further as authorities are aiming for near-zero new cases who have been active in the community, and while only 10% of the population is fully vaccinated.