With lockdowns continuing to disrupt activity across Australia's two largest states, the ABS's monthly Labour Force Survey for September, due today at 11:30am AEDT, is expected to extend the weakness in employment, hours worked and participation reported in August.
As it stands | Labour Force Survey
Lockdowns and restrictions in place across much of the nation to curb the spread of the Delta variant led to a 146.3k fall in employment in August (vs -80k expected), its sharpest deterioration since the 2020 national lockdown (reviewed here). This lowered total employment to 13.02 million, leaving it just above pre-pandemic levels. Going into the month, employment had slowed to a 3.1k rise from 28k in June as restrictions in Sydney started to tighten.
As with earlier lockdowns, part-time employment was hardest hit falling by 78.2k in the month. Employment in the segment is now at an 11-month low and is below its pre-pandemic level. The loss in full-time employment extended from -5k in July to -68k in August, but its level was still 1% higher than prior to COVID.
The effects of stay-at-home mandates and income support payments drove a further 0.8ppt fall in participation to 65.2% — its lowest since September 2020 and 1.1ppts off March's record high. Despite the fall in employment, a larger decline in the labour force (-168.1k) pushed the measured unemployment rate lower, from 4.6% to 4.5%. A more accurate reflection of conditions was reported through the escalation in both underemployment (9.3% from 8.3%) and underutilisation (13.8% from 13%).
Hours worked were down heavily in August (-3.7%), to be 2.9% below pre-pandemic levels. Significant declines were posted by states in lockdown; New South Wales -6.5%, Victoria -3.4%, and Queensland -5.3%.
Market expectations | Labour Force Survey
With lockdowns persisting in New South Wales and Victoria and similar restrictions extending into the ACT, the labour market continued to deteriorate in September. The ABS's high-frequency series had payroll jobs falling by 2.1% over the reference period of today's report. The market consensus is for employment to fall by 110k around a band of estimates from -25k to -225k.
The national unemployment rate is forecast to rise from 4.5% to 4.8%, though the wide range of estimates (from 4.5% to 5.4%) reflects the limited visibility over the situation. In any case, given the large falls in participation and hours worked, the unemployment rate is not the best indicator of current conditions.
What to watch | Labour Force Survey
The change in hours worked will continue to provide the most accurate reflection of lockdown impacts and will help to firm up estimates of the contraction in Q3 GDP. Measures of underutilisation will remain on the rise with restrictions holding many people back from going to work. Together with the large fall expected in employment, the participation rate is likely to decline sharply again in September.
