On the surface the Australian Bureau of Statistics figures should be a benefit to the Coalition and its desire to make people understand it is a better manager of the economy, but it missed market expectations of 3.8 per cent.
And following on from the record-breaking unemployment, AMP Capital’s Shane Oliver has tipped a hike in the Reserve Bank’s cash rate of 0.4 per cent next week.
He said the plunge in underutilisation, which was at its lowest level since 2008, points to a significant pick-up in wages and that the unemployment level should fall to 3.5 per cent by the end of the year.
ANZ differed saying that when added to the disappointing wages figures from yesterday “this suggests a 25 basis point (0.25 per cent) cash rate hike at the RBA’s June board meeting is more likely than a supersized 40 to 50 basis point hike”.
But economist Saul Eslake pointed out employment was virtually unchanged in April because the ABS revised down its April unemployment figure to 3.9 per cent. What decline there was related to a drop-off in the participation rate. In effect, there were 7000 fewer people looking for work.
“My estimate of the ‘effective’ unemployment rate (adding in people counted as ’employed’ despite working zero hours for ‘economic’ or ‘other’ reasons (apart from annual or sick leave) remained unchanged in April at 4.6 per cent, down from the most recent peak of 10.5 per cent last August,” Eslake said.
And in Queensland where the unemployment rate climbed to 4.5 per cent, Conus Consultancy economist Pete Faulkner said full time employment was up 12,000 to another record and the seemingly worsening picture was caused by a big drop in part-time employment.
That may not be a bad thing because it could mean that people are transitioning from part time to full time.
Employment growth for the month was 3.6 per cent in Queensland, according to Faulkner, which put it well ahead of the national growth. So, what seems to be a bad result for Queensland disguised a good report.
But the State Government may look jealously at the other big mining state, Western Australia, where unemployment fell to 2.9 per cent.
The economic impact of Covid and presumably the flu was also revealed by the figures. About 740,000 people worked reduced hours in April because of illness, almost double the usual level in April before the pandemic. Of those people, about 340,000 worked no hours, which was around triple the normal level.
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