The unemployment rate rose to 4.6% in September – and the labour market might not recover before 2022

The unemployment rate rose to 4.6% in September – and the labour market might not recover before 2022
  • Australia’s unemployment rate rose 0.1% over September to 4.6%, the Australian Bureau of Statistics said.
  • The nation lost 138,000 jobs over the month as lockdown restrictions constrained NSW and Victoria.
  • The topline unemployment rate does not tell the full story of Australia’s labour market, with workforce participation falling.
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Australia’s unemployment rate rose 0.1% in September to 4.6%, reflecting the labour market damage inflicted by lockdowns across New South Wales and Victoria.

But a corresponding drop in workforce participation has again rendered the topline unemployment figure a foggy representation of the current jobs market.

On Thursday, the Australian Bureau of Statistics (ABS) revealed the nation lost 138,000 jobs over the month, corresponding with the COVID-19 restrictions keeping thousands of retailers, hospitality venues, and other public-facing workplaces closed.

An increase in the total number of paid positions across Queensland, Western Australia, and Tasmania was unable to offset job losses in NSW, which saw 25,000 vanish, and Victoria, which lost 123,000 jobs.

The fact the topline unemployment rate rose ‘just’ 0.1% is largely a function of the participation rate falling -0.7% over the month to 64.5%.

With an abundance of workers simply unable to do their jobs, and receiving government support payments or the JobSeeker allowance instead, fewer were listed as unemployed and actively seeking work.

Fewer Australians formally listed as unemployed means the overall unemployment rate doesn’t tell the full story, said ABS head of labour statistics Bjorn Jarvis.

“The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions,” Jarvis said.

“Beyond people losing their jobs, or working reduced or no hours, we continue to see how challenging it is for people without work to remain active within the labour market during lockdowns,” he added.

Despite the harsh realities facing countless workers, overall hours worked actually increased through September.

This was largely due to a growth in hours worked over Queensland — but also due to an somewhat unlikely uptick in NSW.

“The NSW result partly reflects the normalisation of construction activity after it’s two week shutdown in late July, which was followed by a gradual re-opening in August,” said Sarah Hunter, chief economist for BIS Oxford Economics.

“It also appears that in the lockdown states fewer people than normal took annual leave in September – unsurprising given the restrictions – which has supported a general increase in hours worked.”

The return of construction, the reopening of NSW’s ‘non-essential’ venues on Monday, and the forthcoming reopening of Victorian industries will likely budge the needle in November — meaning they will only become apparent in December’s report.

Don’t expect an instant and total snap-back, though.

“Notwithstanding the capacity for a robust recovery in the economy it is likely to be well into 2022 before the labour market fully recovers,” Hunter added.