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What you need to know about the ABS data on Australia’s unemployment rate

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Victoria is only now slowly emerging from lockdown. And social distancing rules remain in place across the rest of Australia.

With that in mind, the results on Australia’s unemployment rate from the Australian Bureau of Statistics (ABS) August Labour Force report are surprisingly upbeat.

The ABS data, released this morning, indicated that seasonally adjusted employment between July and August rose 0.9%. That means 110,000 more people were working, although not all of them were working as many hours as they’d like. Nationally, hours worked increased by 0.1%.

Women led the charge in cutting Australia’s unemployment rate.

ABS Labour Statistics head Bjorn Jarvis said the large increase in seasonally adjusted employment coincided with a large decrease in unemployment of 87,000 people, around 55,000 of whom were females.

Lockdown damage revealed

Not surprisingly, Victoria’s labour force is the most hampered, due to the state’s Stage 4 COVID-19 lockdown laws.

Jarvis said hours worked fell by 4.8% in Victoria, compared to a 1.8% increase across the rest of Australia. He added:

The August data provides insights into the labour market impacts from the Stage 4 restrictions in Victoria. In addition to the large fall in hours worked, employment in Victoria also decreased by 42,400 people and the unemployment rate increased to 7.1%.

The biggest labour market winner

Nationally, Australia’s unemployment rate was 6.8% in August. While down 0.7% from July, that’s still 1.6% above the August 2019 unemployment figures.

The ABS also revealed that unemployment rates decreased in every state and territory with the exception of Victoria where it increased 0.4%, and Tasmania, where it rose 0.3% to reach 6.3%. The Northern Territory was the biggest labour market winner, with unemployment falling 3.3% to 4.2%.

Despite a drop in Australia’s overall unemployment rate, the labour participation rate only nudged up 0.1% to reach 64.8%. That’s still 1.1% lower than in March this year.

The underemployment rate – people who are employed but not working as many hours as they’d like – stayed steady at 11.2%. That’s 2.4% higher than in March this year and 2.7% higher than in August 2019.

A final useful metric, the under-utilisation rate, combines the unemployment and underemployment rates. Under-utilisation declined by 0.7% to 18.0%. That’s heading in the right direction, but still 4.7% higher than it was in March.

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Motley Fool contributor Bernd Struben 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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