Australia Employment Slumps by Record 594,300

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Employment plunged by 594,300 in April, compared with an estimated 575,000 drop, data from the statistics bureau showed in Sydney Thursday. The jobless rate rose to 6.2%, well below economists’ median estimate of 8.2% as participation plunged to 63.5% from 66% in March.

The underemployment rate rose to a record high 13.7%, up 4.9 percentage points, the Australian Bureau of Statistics said. The Australian dollar held declines on the day and was trading at 64.32 U.S. cents at 11:43 a.m. in Sydney.

The result comes as companies ranging from Australia’s two major airlines to casinos to department stores furloughed or stood down tens of thousands of workers as demand collapsed and, in many cases, doors forced shut.

The Reserve Bank of Australia predicts the economy will contract 10% from peak-to-trough this year and expects unemployment to surge to around 10% by June. Governor Philip Lowe says hours worked will be a key metric to gauge the hit, as the government’s JobKeeper initiative that keeps workers attached to employers during the shutdown, and an expected fall in participation, limit some of the increase in the official unemployment rate.

The government and central bank responded with a massive fiscal-monetary injection worth 16.4% of gross domestic product to support the economy.

Qantas Airways Ltd. in March furloughed most of its 30,000-strong workforce and rival Virgin Australia Holdings Ltd. stood down 80% of its workforce. Star Entertainment Group Ltd. furloughed 90% of its 9,000 employees after the government ordered the closure of casinos and Myer Holdings Ltd. temporarily shut all stores.

Retailer Premier Investments Ltd. closed all of its stores for about a month, standing down almost all 9,000 employees, while Flight Centre Travel Group Ltd. said it was furloughing 3,800 people. Tabcorp Holdings Ltd. stood down 700 workers.

The initial closure of swathes of the economy had a dramatic impact on consumer and business confidence, with both plummeting in response. Sentiment regained some ground in the subsequent month, reports showed this week.

Authorities success in flattening the infection curve has improved sentiment and allowed restrictions to partially be eased. The government aims to reopen many parts of the crippled economy by July and get 850,000 people back in jobs.

©2020 Bloomberg L.P.

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