Labour force figures released today by the ABS show the level of employment fell by 46,300 (or 0.4 per cent) in October.
Full-time employment has declined by 40,400 (or 0.4 per cent) over the month, while part-time employment has declined by 5,900 (or 0.2 per cent). The fall in national employment levels was primarily driven by a decline in employment of 49,600 (or 1.5 per cent) in Victoria. This was partially offset by growth in employment of 21,700 (or 0.6 per cent) in New South Wales, as business confidence improved.
The level of unemployment increased by 81,800 (or 13.1 per cent) over the month. The seasonally adjusted unemployment rate increased by 0.6 percentage points, to 5.2 per cent in October, although it is still below the level recorded in March 2020 (when Australia recorded its 100th case of COVID-19).
The ABS has advised that the decrease in employment in October did not translate into a similar increase in unemployment, because more people entered the labour force, increasing the participation rate by 0.1 percentage points, to 64.7 per cent. The ABS has also advised that if the 35,500 people who entered the labour force in October had not done so, the unemployment rate would have risen to 5.0 per cent.
The number of people entering the labour force in October was mostly driven by changes in New South Wales, where 56,600 people entered the labour force and the participation rate increased by 0.8 percentage points, to 62.6 per cent.
The figures released today continue to reflect the negative impact that the COVID-19 pandemic and related lockdowns have had on labour market activity. That said, the Australian labour market is set for a strong recovery, with payroll jobs already rebounding and job advertisements surging to a 13-year high.
In addition, Australians are more confident about their job prospects, with the latest Westpac Melbourne Institute Unemployment Expectations Index showing a fall of 11 per cent, to the lowest level in nearly three decades.
The RBA’s most recent Statement on Monetary Policy notes that, ‘the temporary effects of recent lockdowns on the labour market are already receding and employment and participation are forecast to have fully recovered to their pre-Delta levels by the end of 2021.’
The RBA’s central scenario forecasts are for employment to grow strongly, by 2¼ per cent over the year to the December quarter 2021, while the unemployment rate is expected to be a little below 5 per cent by the end of the year, before declining to 4 per cent by the end of 2023.