Australian employment declined by 30.6k in April in a downside surprise on consensus estimates. An easing in the participation rate from record highs meant that despite the weakness in employment, the national unemployment rate moved down from 5.7% to 5.5%. April's report was the first since the expiry of the JobKeeper pandemic wage subsidy, though seasonal effects make it difficult to draw firm conclusions at this stage.
Labour Force Survey — April | By the numbers
- Employment (on net) declined by 30.6k in April, falling well short of expectations for a 20.0k increase and coming in towards the lower end of the range of estimates (-40.0k to +60.0k). March's initially reported rise in employment of 70.7k was revised up to 77.0k in today's release.
- National unemployment declined from an upwardly revised 5.7% (from 5.6%) in March to 5.5%, beating the median estimate of 5.6%.
- Australia's participation rate declined from its record high of 66.3% to 66.0% in April.
- Hours worked declined by 0.7% in April to 1.79bn hours on seasonal effects, with the timing of the Easter period and school holidays meaning that more Australians were taking annual leave than would usually be the case at that time of year. Despite this, base effects dating back to the depths of the pandemic led to annual growth in hours worked surging up by 10ppts to 12.5%.
Labour Force Survey — April | The details
Australian employment recorded a fall of 30.6k for the month of April, ending a run of 6 consecutive monthly gains and disappointing market expectations for a modest rise (20.0k). The timing of the sampling conducted for this report factors in the expiry of the JobKeeper scheme, though in the commentary that accompanied today's release, the ABS said that it was difficult to identify a discernible impact between the end of the government's pandemic wage subsidy and the fall in employment. Seasonal effects were cited as a factor, with more people taking annual leave than usual in April over the Easter and school holiday period, while the ABS also noted that it had not seen signs in other indicators that would point to the impact of the JobKeeper expiry: there had not been large net outflows from the labour force and the number of employed people working zero or reduced hours due to 'economic reasons' in April (58.9k) was similar to March (56.9k), in line with pre-pandemic levels. Even with the decline in April, employment is still higher than it was prior to COVID, by around 0.4%.
Part-time employment was down by a sizeable 64.4k for the month, making this the segment's weakest outcome since the lockdowns during the first wave of the virus around 12 months ago. This accounted for all of the fall in headline employment, with some offset coming through from full-time employment, which rebounded by 33.8k after its upswing had hit a bump in the road in March with a 21.1k fall. Employment in both the part-time (0.5%) and full-time segments (0.3%) is above pre-pandemic levels.
The participation rate came off its record high level in March, easing back from 66.3% to 66.0%. With this leading to a larger fall in the labour force (-64.4k) than the decline in employment (-30.6k), the measured unemployment rate moved down from 5.7% to 5.5% to be around 2ppts lower than at peak of the pandemic but it is still higher than its level from before the crisis. Rates of underemployment (-0.2ppt to 7.8%) and underutilisation (-0.4ppt to 13.3%) declined in April and are now some way below what were already high levels before COVID.
Total hours worked were sharply lower in April (-0.7%), with a large decline in part-time hours (-2.4%mth) pointing to the impact of Easter holidays and full-time hours (-0.3%) also down with many people taking annual leave over the period, which also aligned with school holidays. Even with this, hours worked in the Australian economy in April were 1.8% higher than before the pandemic (FT hours +1.5% and part-time hours +2.8%), which speaks to the durability and vibrancy of the reopening effort.
Across the states, employment outcomes were generally weak with declines being recorded in New South Wales (-36.7k), Western Australia (-14.4k), Queensland (-7.4k) and Tasmania (-2.5k), though South Australia (+15.3k) and Victoria (+3.6k) went against the trend. Employment in New South Wales slipped back below its pre-pandemic level, though South Australia has now more than regained its losses from the pandemic. The only states to see a rise in unemployment in the month were Queensland (+0.1ppt to 6.1%) and Tasmania (+0.2ppt to 6.2%), though this come alongside rises in participation rates. Unemployment in New South Wales and Victoria is now at 5.5%, though participation rates have softened a little in both over recent months.
Labour Force Survey — April | Insights
More data will be needed before definitive conclusions can be drawn around the effects of the expiry of JobKeeper on the recovery in the labour market. Today's result would most likely reflect some immediate impact from the withdrawal of the wage subsidy, but this is something that is likely to play out over several months rather than all coming at once. Elevated levels in job vacancies suggest there is plenty of demand for labour, though labour shortages are not widespread across the economy. All in all, the labor market is well placed to withstand the transition away from JobKeeper, particularly with both the fiscal and monetary authorities making renewed efforts to return to full employment.