Finance Finance News Unemployment jumps to 7.4 per cent despite rise in job numbers

Unemployment jumps to 7.4 per cent despite rise in job numbers

Australia's official unemployment rate has jumped from 7.1 per cent to 7.4 per cent.
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Australia’s official unemployment rate jumped from 7.1 per cent to 7.4 per cent in June as more people started actively looking for work.

The increase came despite more people regaining part-time work as restrictions eased.

Full-time employment fell by 38,100 people over the month and part-time employment increased by 249,000 people, according to the Australian Bureau of Statistics.

Meanwhile, official unemployment increased by 69,300 to 992,300 people, the highest number recorded since monthly records began in 1978.

This took the official jobless rate to a 22-year-high of 7.4 per cent, though Treasurer Josh Frydenberg has conceded the true rate is closer to 13.3 per cent.

Even though hundreds of thousands of workers regained jobs, the unemployment rate increased as the number of people counted in the labour force also increased.

This is because more people were actively looking for work – with the participation rate consequently increasing 1.3 percentage points to 64.0 per cent.

Bjorn Jarvis, head of labour statistics at the ABS, said the figures showed easing COVID restrictions had given the economy a boost.

But the numbers do not take into account the second wave of infections in Victoria.

“The easing of COVID-19 restrictions in June saw an extra 280,000 people in the labour force, with more people in employment, and more actively looking and available for work,” Mr Jarvis said.

Meanwhile, EY Oceania chief economist Jo Masters said the figures were better than expected, but would likely deteriorate in coming months.

Firms are facing recessionary conditions,” she wrote in a note to clients.

“More people are likely to start to look for work as restrictions ease, the Melbourne lockdown will have an economic impact and, based on current policy, we expect many currently on JobKeeper (and so counted as employed) will move on to JobSeeker, and be counted as unemployed.”

Economists at National Australia Bank (NAB) expects the official unemployment rate to peak at 8 per cent, having revised down earlier forecasts following early success on the health front.

But these forecasts are predicated on a gradual phasing out of JobKeeper, rather than a sudden removal, and on the federal government not reverting the JobSeeker payment back to pre-crisis levels.

Meanwhile, Treasurer Josh Frydenberg said on Monday that the true unemployment rate was closer to 13.3 per cent, if the number of people working zero hours or who have lost jobs and given up searching for a replacement was taken into account.

The Treasurer will deliver an update to parliament on JobKeeper and the economy on July 23.