Australian jobs plunged by the most on record in April as employers laid off hundreds of thousands of staff in response to the economy-wide shutdowns to curb the spread of the coronavirus.
Thursday’s data from the Australian Bureau of Statistics (ABS) showed employment in April decreased 594,300, the largest fall on record.
The unemployment rate shot up to 6.2%, the highest since September 2015, from 5.2% in March but lower than the 8.3% forecast by economists in a Reuters poll.
The main reason unemployment did not fall as much as expected was the significant decline in the number of people looking for work, which meant fewer people than expected were counted among the unemployed.
As a result, the participation rate fell 2.4 percentage points to 63.5% from April, the lowest since 2004 and well below the 65.2% forecast.
“The unemployment rate rose far less than most had anticipated in April, but that masks a sharp fall in employment and we still expect the unemployment rate to rise further over the coming months,” Marcel Thieliant of Capital Economics wrote in a note.
The data is the first official estimate of unemployment in Australia since the COVID-19-related mobility restrictions forced business to down shutters since late March.
The figures come as Australia’s central bank predicted the country’s gross domestic product (GDP) could shrink by 10% in the first half of the year with unemployment hitting 10% by June and staying elevated through 2021.
The Reserve Bank of Australia (RBA) has gone all-in by cutting rates to a record low of 0.25%, flooding the financial system with cash and even buying government bonds to lower borrowing rates for business.
Immediate revival unlikely
Additionally, Prime Minister Scott Morrison has pledged spending worth more than 10% of GDP, including a A$130 billion subsidy to employers to keep staff they might otherwise have let go.
The ABS data showed underemployment, or the number of people already working but looking for more hours, spiked 4.9 percentage points to 13.7%.
Hours worked reduced by 9.2% between March and April in seasonally adjusted terms, double the decrease in employed people, the data showed.
The ABS estimates that a combined group of 2.7 million people were affected by either job loss or having their hours reduced for economic reasons between March and April.
This group was much larger than the number of people who gained employment or worked increased hours between March and April, underpinning the net results.
Economists say the labour market is unlikely to improve rapidly even though parts of Australia’s economy are now re-opening with the rate of growth in new infections having slowed to around 0.1%.
The “reopening will be a gradual process and not everyone who lost their job during the lockdown will immediately find a new one,” Thielant said.
The dire Australian numbers follow those in the United states, which showed 20.5 million jobs lost in April, and the unemployment rate rising to 14.7%. The true U.S. unemployment rate may be closer to 19.5%, the government had said in a note attached to its report.