Home ›› 21 May 2022 ›› Back
Australia’s unemployment rate stood at its lowest in almost 50 years in April as firms took on more full-time workers, a tightening in the labour market that will ratchet up pressure for further hikes in interest rates.
Figures from the Australian Bureau of Statistics on Thursday (May 19) showed the jobless rate held at 3.9 per cent in April, from a downwardly revised 3.9 per cent in March, matching market forecasts.
Employment missed forecast with a rise of just 4,000, though that reflected a large 92,400 gain in full-time jobs being offset by a 88,400 drop in part-time work, reports Reuters.
The fall in unemployment will be welcomed by Prime Minister Scott Morrison who has made jobs the clarion cry of his election campaign ahead of what is expected to be a close vote on Saturday.
It also strongly suggests the Reserve Bank of Australia (RBA) will lift interest rates again in June as it scrambles to contain a flare up of inflation to two-decade highs.
The central bank’s hike to 0.35 per cent this month was the first since 2011 and markets are odds on it will move to 0.60 per cent at its Jun 7 policy meeting.
So strong is the inflation tide globally that investors are wagering rates will rise to at least 2.5 per cent by the end of the year, even if that threatens to cripple the economy.
So far, the labour market has withstood the pressure with employment rising by 381,500 in the past 12 months. Underemployment also fell to its lowest since 2008 and this rate has a close correlation to wages over time.
Wages, though, are still lagging, at least by the official measure which showed annual growth ticked up only slightly in the first quarter to 2.4 per cent, half the pace of inflation.
However, surveys of businesses paint a different picture with more and more firms saying they are having to bump up pay to attract workers.
The RBA’s Board was particularly alarmed that firms were planning to pass on rising input and labour costs to customers, a sea change from the past decade when fierce competition kept prices restrained.
“The RBA has returned to a more forward-looking approach for labour costs amid much higher inflation, shifting on leading indications from liaison and the anticipated feed through of the still-tightening labour market to wages outcomes,” said Taylor Nugent, an economist at NAB.
He sees the central bank hiking by a quarter point at each of the next three monthly meetings.
‘Staff shortages’
“Overall, today’s data remain consistent with a still-tightening labour market and continued difficulty for firms in finding labour,” said National Australia Bank economist Ted Nugent.
“This should see stronger wages growth emerge as the year progresses.”
Many employers say they are struggling to find staff in the tight jobs market.
“We’re definitely still feeling staff shortages,” said Matt Jenkins, human resources manager at Sydney restaurant group Applejack Hospitality.
“I know for chefs, they can have multiple job offers at a time. And even candidates that we’re speaking to, they’re sitting on offers for weeks while they still canvass the market,” he told AFP.
Bruno Goncalves, co-owner of Edes Restaurant and Bar in central Sydney, said he found it particularly hard to recruit experienced staff.
More foreign jobseekers were becoming available, he said, since the re-opening of Australia’s international borders, which were shuttered for nearly two years to keep out the Covid-19 virus.
