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ANZ economists expect the jobless rate to fall even further from its current decade-low, even with the nation’s largest city likely to be locked down for a few more weeks.
This week the Australian Bureau of Statistics revealed unemployment hit a 10-year low 4.9 per cent in June - dropping from 5.1 per cent in May - with almost 30,000 jobs created during the month.
It was the lowest unemployment rate since June 2011, even as lockdowns in Sydney and Melbourne threaten to restrict the nation’s economic growth.
ANZ economists led by Catherine Birch today said they expect an eight-week lockdown in Greater Sydney and surrounds will see NSW employment fall by between 50,000 and 60,000, although a fall in participation will mitigate the impact on the unemployment rate.
ANZ says the jobless rate is tipped to drop to 4 per cent in 2023. Credit:Luis Ascui
Subsequently, ANZ is forecasting Australia’s unemployment rate to fall to 4.4 per cent in the fourth quarter and then to 4.2 per cent by the end of 2022.
It expects the rate to drop to 4 per cent by end-2023. This was last achieved in August 2008.
“We maintain our very positive longer-term outlook, especially given the better starting point,” Ms Birch said
While the unemployment rate dropped to 4.9 per cent last month, the underemployment rate jumped 0.5 per cent to 7.9 per cent.
This followed a 1.8 per cent decline in hours worked, equivalent to 33 million fewer hours across the economy thanks to a two-week lockdown in Victoria at the start of the month and an ongoing lockdown for Sydney at the end.
Ms Birch said the clearest disadvantage for NSW’s labour market during the current lockdown is the absence of JobKeeper.
“But policy support from both the NSW and federal governments is in place, including some business cash flow payments that are contingent on recipients not laying off workers.”
ANZ continues to expect the RBA to raise the cash rate twice in the second half of 2023 to 0.5 per cent.
“At this stage, we expect no change to RBA policy due to the NSW lockdown, but it has the option to delay tapering of bond purchases if economic data deteriorate,” Ms Birch said.