• Unemployment dropped to just 4.9% in June, the lowest level since December 2010, according to the latest figures from the Australian Bureau of Statistics.
• That drop means unemployment is below the Reserve Bank of Australia’s projections for the end of 2021, analysts note, suggesting more pressure cash rate adjustments.
• Yet the raw figures don’t tell the whole story, with hours worked declining in response to Victoria’s lockdown.
• Visit Business Insider Australia’s homepage for more stories.

Australian unemployment fell to its lowest level in more than a decade in June, according to the latest Australian Bureau of Statistics (ABS) labour force data, suggesting the Reserve Bank of Australia (RBA) may need to reassess its cash rate strategy and end-of-year projections.

But the raw unemployment data does not tell the full story of Australia’s stop-start recovery from the economic maelstrom of 2020, with the number of hours worked highlighting how brutal Victoria’s most recent lockdown was for thousands of workers.

In its new labour force report, unveiled on a particularly chaotic Thursday, the ABS announced unemployment has dropped to just 4.9% in June, a cool 0.2 points below the May figure.

The figure is the lowest registered since December 2010, according to Bjorn Jarvis, the organisation’s head of labour statistics.

The overall number of unemployed people across Australia fell by 22,000 to 679,100. The latest figure is a cool 303,700 lower than in June 2020, when the nation dove into the throes of pandemic life.

Those figures comport with data from Australian job-hunting platforms, which have posted record numbers of new job listings in recent months, Jarvis said.

And those stats partially correlate with the skills shortages impacting select industries, Jarvis added, nodding to the international border closures which have seen some firms jockey for domestic talent.

But the broadly positive news for the labour market could lead to serious discussions at Australia’s central bank, analysts maintain, given the 4.9% figure arrived six months earlier than the RBA projected.

In its latest economic outlook, unveiled in May, the RBA forecast the unemployment rate to dip to “around 5 per cent by the end of 2021 and 4½ per cent by the end of the forecast period in mid 2023.”

That could change the bank’s main equations, according to Indeed APAC economist Callam Pickering.

The RBA plans not to hike rock-bottom interest rates from just 0.1% until “inflation is sustainably within the 2–3 per cent target range,” governor Philip Lowe reiterated in a June address.

And to reach that inflation target, the RBA is hoping to drive wage growth. To do that, the RBA plans to continue stimulating the economy with lax monetary conditions and its gently-amended bond buying program.

The great hope is that cash-flushed firms will continue their hiring sprees, carving away at unemployment to a point where wages begin to grow, elevating inflation.

That central unemployment projection for the end of 2021 has already been met.

Yet there may still be cause for the RBA to keep rates at ocean-floor levels, should sporadic coronavirus lockdowns persist across the country.

According to ANZ senior economist Catherine Birch, a more telling interpretation of the June figures is not the raw unemployment rate, but the number of hours worked, which dipped by 33.4 million, or 1.8%, over the month.

This is because the survey period covered Victoria’s most recent lockdown, which once again forced the widespread closure of public-facing businesses and forced retail, hospitality, and tourism operators to drastically reduce the number of hours on the books.

“The most recent lockdown in Victoria saw a drop of nearly 40 million hours (8.4%) between May and June 2021, with the June level 5.1% lower than March 2020,” the ABS added.

The findings from recent lockdowns suggest spending rebounds quickly from snap closures.

Howevem the latest ABS data heralds the kind of labour market disruption the latest Greater Sydney lockdown is likely to cause, despite the announcement of massive new state and federal support measures for impacted businesses and workers.

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