- Jobs continued to bounce back in July, but its trajectory upwards has slowed considerably in the latest report from ANZ Bank.
- “The second wave of COVID-19 cases and return to Stage 3 restrictions in Melbourne and the Mitchell Shire have undoubtedly weighed on the recovery in labour demand so far,” senior economist Catherine Birch said.
- With Victoria moving to stage four at the beginning of August, the federal government will need to do even more to support a jobs recovery, Birch noted.
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A ‘state of disaster’ in Victoria has raised fresh doubts over what shape Australia’s economic rebound will actually take.
The labour market, which had been bouncing back strongly, appeared to have the wind knocked out of its sails in July, according to ANZ job ad figures released on Monday.
“The second wave of COVID-19 cases and return to stage four restrictions in Melbourne and the Mitchell Shire have undoubtedly weighed on the recovery in labour demand so far,” ANZ senior economist Catherine Birch said.
Over the last month job ads had risen a respectable 17% after a far more spectacular rise in June. However, fresh concerns over the state of Victoria – which on Sunday announced unprecedented stage four restrictions – is still holding the economy back, as growth stalled at the end of July.
The road to recovery is looking a lot more complicated, as the virus’ impact spreads to sectors that had until now seemed almost immune.
“Payroll jobs turned down in early July and some industries that were less affected earlier in the pandemic, such as construction and professional services, may now be suffering lagged impacts,” Birch said.
It comes a little over a week since the Morrison government released its July 23 budget update, signalling it would extend reduced cornerstone support programs like JobKeeper from September.
When the wage subsidy eventually ends, one in ten businesses plan to close while one in eight will cut staff numbers, according to an ABS survey conducted in the middle of last month.
However, as the outlook again changes, greater federal government support could be required to arrest further deterioration.
“We had factored in a four-week extension to stage three restrictions and thought the labour market – both in Victoria and elsewhere – would recover more slowly than previously expected. But the move to Stage 4 restrictions in Melbourne and Stage 3 in regional Victoria announced on Sunday worsens the outlook,” Birch said.
“We think additional fiscal measures will be needed sooner rather than later to support households, workers and businesses through this very tough period.”
While Australia’s projected $184.5 billion deficit haunts it, the Morrison government appears to be listening. It is considering lowering the eligibility bar for JobKeeper 2.0 to avoid pushing too many businesses off life support when the program is revised at the end of next month.
Paid pandemic leave also remains a central part of its industrial relations agenda, with department minister Christian Porter in discussions with employer groups and unions over how a federal scheme could work and to which workers it would extend.
There’s plenty of Australians who may now be counting on it.