Finance Work Grim jobs data reflects heavy toll of Victoria’s lockdown

Grim jobs data reflects heavy toll of Victoria’s lockdown

Victoria is continuing to suffer significant job losses. Photo: TND
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Businesses have hit the pause button on rehiring plans, with national payroll jobs falling 0.1 per cent over the fortnight to July 25.

The disappointing result dashes hopes of a rapid recovery as restrictions ease and hides a far worse situation in Victoria.

As the state recorded another 331 cases and 19 coronavirus deaths on Tuesday, the Australian Bureau of Statistics revealed Victorian businesses had slashed the number of payroll jobs by 1.5 per cent in July.

That equates to more than 45,000 jobs and only captures the early effects of Stage 3 restrictions and none of Stage 4, which came into effect across metropolitan Melbourne on August 5.

The data shows the virus-riddled state lost 6.7 per cent of payroll jobs between March 14 and July 25, compared to 4.1 per cent in New South Wales, 3.4 per cent in Queensland, and 4.5 per cent across the country.

Indeed APAC economist Callam Pickering noted, however, that the ABS often revises these payroll figures at a later date, which can turn a poor outcome into a more reasonable outcome.

“For example, the payrolls figure for July 11th was revised upward by 1.3 per cent and July 4th by 0.9 per cent,” he said.

Nonetheless, the data points to a slow recovery in the jobs market after businesses shed an estimated 740,000 jobs over the three months to June 30.

Economists at ANZ bank believe Melbourne’s Stage 4 restrictions will cause 90,000 workers to lose their jobs by September, while separate analysis by Treasury suggests an extra 400,000 workers could lose their jobs or be stood down before the end of the year.

“This is not an economic crisis that will be easily overcome and the recovery in economic activity and jobs will be slow,” Mr Pickering said.

“We are seeing exactly that in these payroll figures.”

That’s not to say that some sectors aren’t profiting from the pandemic, though.

Mr Pickering said four sectors had higher business payrolls today than before the virus took hold.

“Finance and public administration are leading the way, followed by utilities and the mining sector,” he said.

“Despite considerable improvement, the hardest-hit sectors are accommodation and food services (down 18 per cent compared with mid-March) and arts and recreation (down 15 per cent).”

Meanwhile, ABS Labour Statistics head Bjorn Jarvis said there had been a noticeable improvement in Victoria’s labour market until restrictions had knocked the recovery off course.

“Around 40 per cent of jobs lost in Victoria by mid-April had been regained by 25 June, but by the end of July this had reduced to 24 per cent,” he said.

Victorian Premier Daniel Andrews introduced stay-at-home restrictions across selected Melbourne postcodes on July 1 and extended these to the entire city on July 8.

Then on August 5 he introduced tougher Stage 4 restrictions in metropolitan Melbourne and Stage 3 restrictions in regional Victoria.

And bank transaction data shows Victorians have already cut back on spending as a result.

In the week ending August 7, credit and debit card spending in the state was down 1 per cent on the same time last year, according to Commonwealth Bank, whereas national card spending was up 8 per cent.

Spending was weakest in the Australian Capital Territory (down 12 per cent) and strongest in Western Australia (up 20 per cent) – with reduced cash usage accounting for 6 per cent of card spending and increased PayWay usage accounting for 4 per cent.

The CBA data also shows Victorians have been stockpiling food and alcohol during the lockdown, with spending up 50 per cent on the former and up 57 per cent on the latter.

The payroll figures come ahead of official unemployment figures to be released on Thursday.

ANZ is forecasting employment to increase by 60,000 workers in July – which would be significantly less than the 210,000 increase in June – while CBA economist Gareth Aird is forecasting an increase in employment of 50,000 workers.

“But [we] now expect employment to fall by a combined 50,000 over August and September, due to the move to Stage 4 restrictions in Melbourne and Stage 3 in regional Victoria,” ANZ senior economist Catherine Birch wrote in a note to clients.

“Prior to this, we had expected a rise of 40,000 across the two months.”