As it stands | Labour Force Survey
March's report reflected conditions in the first half of the month, coming ahead of the World Health Organization declaring the COVID-19 outbreak a global pandemic and the Federal government introducing social distancing measures. As a result, employment was reported to have lifted by 5.9k in March in contrast to market expectations for a 30.0k fall. The unemployment rate lifted by 0.1ppt to 5.2% — below the consensus forecast for a rise to 5.4% — as the level of workforce participation remained unchanged at 66.0%. In a concerning development, the measures providing a broader read on spare capacity in the labour market were on the rise going into the crisis with underemployment lifting to its highest level in more than 3 years at 8.8% and underutilisation hitting a 2-year high at 14.0%. Hours worked were expected to weaken materially to reflect the disruption to working arrangements associated with concerns over the virus, however; in the event aggregate hours worked increased by 0.5% on the month to 1.78bn hours.
Market expectations | Labour Force Survey
Expectations are for this to be one of the worst labour market reports ever seen in Australia. Consensus according to Bloomberg's survey is for employment to post its sharpest monthly fall on record of -450k (range: -125k to 1,000k), while the unemployment rate is predicted to rise to its highest level in more than two decades at 8.3% (range: 5.6% to 10.0%).
While it is a given that a very sharp deterioration in conditions will be reported today, the huge variation on the ranges of estimates highlight there is a great deal of uncertainty as to its severity. The ABS's weekly payrolls data indicate that between March 14 and April 18 total jobs contracted by 7.5%, though that is not directly comparable with employment measured in this survey.
The other issue is around how workers will be classified in the survey. The ABS has advised that workers covered by the JobKeeper (wage subsidy) scheme will be regarded as employed regardless of hours worked, while the employment status for those receiving the JobSeeker payment will depend on whether or not they have actively looked for work and were available to start work. The pandemic also potentially meant that a large section of the workforce worked no hours in the reference period through either being stood down or taking some form of leave. For these workers to be classified as unemployed, their period of absence needs to have been for more than one month (without pay), while they also would have needed to have actively looked for work and been available to start a new position immediately.
What to watch | Labour Force Survey
For the clearest understanding of the severity of the deterioration in the labour market look to the change in aggregate hours worked and the broader measures of spare capacity in underemployment and underutilisation. These measures will capture the effects of the disruptions businesses and employees sustained to working arrangements, regardless of classification issues.
