Australian unemployment jumps to 7.1%

The ASX 200 is trading lower today after the Australian Bureau of Statistics revealed a sharp jump in the unemployment rate…

In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end its positive run with a sizeable decline.

At the time of writing the benchmark index is down a disappointing 1.5% to 5,900.8 points.

What is weighing on the market today?

While U.S. futures pointing to declines on Wall Street tonight are certainly not helping matters, today's share market weakness could also be related to Australia's rising unemployment levels.  

This morning the Australian Bureau of Statistics (ABS) released its jobs data and revealed another sharp rise in unemployment.

According to the release, Australia lost a further 227,700 jobs in May. This brought the total number of unemployed people to a sizeable 927,000. Which means that the unemployment rate has now risen to 7.1%, compared to 6.4% in April and 5.2% in March.

The head of labour statistics at the ABS, Bjorn Jarvis, commented: "The drop in employment, of close to a quarter of a million people, added to the 600,000 in April, brings the total fall to 835,000 people since March."

What about monthly hours worked?

The unemployment rate doesn't necessarily show the full extent of the disruption caused by the pandemic.

The ABS data also shows that monthly hours worked fell a further 0.7% in May. This means they are now down 10.2% since March after April's data was revised up to a 9.5% decline.

Mr Jarvis explained: "The ABS estimates that a combined group of around 2.3 million people – around 1 in 5 employed people – were affected by either job loss between April and May or had less hours than usual for economic reasons in May."

One small positive was that the underemployment rate decreased by 0.7 percentage points in May to 13.1%. However, this still remains 4.3 points above the March reading.

This means that the underutilisation rate, which combines the unemployment and underemployment rates, climbed to a new record high of 20.2% in May.

"Women continued to be more adversely affected by the labour market deterioration than men. Younger workers have also been particularly impacted," said Mr Jarvis.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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