Australia: Jobless rate to peak at 8% in the next months - UOB

FXStreet reports that UOB Group’s Economist Lee Sue Ann reviewed the recently published labour market report in the Australian economy.

“Australia's jobless rate climbed to 7.4%, the highest level since November 1998 as the number of people without a job is now almost one million, rising from 923,000 to 992,300 in June, even as COVID-19 restrictions were eased. That said, a record 210,800 jobs were added to the economy in June, more than doubled the 100,000 jobs gains consensus was expecting, after May’s figures were revised higher to 264,100 losses (from 227,700 losses previously). The participation rate rose to 64.0% in June, from 62.7% in May, as more people were counted as looking for work.”

“Treasurer Josh Frydenberg said earlier this week, that the effective rate of unemployment is closer 13% when all those displaced from the job market by the COVID-19 pandemic are counted.”

“The government is also expected to lay out its plans for further stimulus measures, as most will be due to expire in September. It plans to spend AUD1bn to substantially extend the program that pays 50% of the wages of apprentices employed by small businesses from 80,000 workers to cover 180,000 workers across all industries.”

“We see peak unemployment rate at around 8% before ending the year around 7.6%. Nominal wages growth is still expected to be around 1% next year and inflation subdued at around 0.8%-1.2% over this year and next.”