“It is our job above all in politics to tackle the big issues and to explain them, and have the honesty to say to people, 'There are no easy solutions here.'”, Malcolm Turnbull

Against expectations for further demise, the latest Australian Bureau of Statistics (ABS) payrolls data (a new, more accurate and timelier source of data on Australian employment) showed little further loss of jobs over the two weeks to 2 May. Yesterday’s data revealed virtually no change (-0.2% for the national payroll) in the second half of April, compared with the carnage in the five weeks to mid-April when jobs fell around 7%, and a cumulative 900,000 Aussies lost their jobs. The worst net job losses have been, not surprisingly, in accommodation and food (-27%) and arts and entertainment (-19%).

Of course, no job losses in H2 April compare poorly with the economy’s typical 2% annual jobs growth (and roughly 20,000 jobs created per month). But these are not typical times, and key to the shape of Australia’s (and indeed the world’s) recovery from this virus-induced recession is identifying turning points where things begin to become ‘less bad’. A modest recovery in wage growth by 1.4% after a fall of 8% in the prior five weeks—likely helped by JobKeeper—is also mildly positive. Easing lockdown restrictions will hopefully reduce the need for JobKeeper when it ends in late September.

With the more lagged jobs survey for April (taken early in that month) showing only 600,000 jobs lost and unemployment rising 1% to 6.2%, yesterday’s data suggests further historic job losses (circa 300,000) lie ahead for May…but that is less bad than 600,000 and the more up-to-date payrolls data suggest that we are seeing the worst now. Moreover, while the unemployment rate has further to rise, expectations that it would rocket to 10% in the next month or so are being delayed. UBS now believes 10.5% unemployment may only be reached (more gradually) in late 2020, not June 2020. CBA expects unemployment to rise by less—to only 9%.

ABS payroll data – little net job losses over H2 April

Source: ABS, UBS, Annotated by Crestone.

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