COVID Hits Hours Worked, Headline Employment Falls More Than Expected

The ABS noted that the latest labour market report "covered the first two weeks of August, which included the continued lockdown in New South Wales, new lockdowns in Victoria, Queensland and the Australian Capital Territory, and a series of changes in restrictions in other parts of the country."

• "Labour market changes in New South Wales continued to have a large influence on the national employment and hours worked figures. In August, there were big falls in New South Wales in both employment (-173,000) and hours worked (-6.5%). The large falls in employment and hours in New South Wales in August followed falls in July (37,000 and 7.0%), with employment and hours down by 210,000 people and 13.0% since the beginning of the lockdown in late June."
• "The fall in the unemployment rate reflects a large fall in participation during the recent lockdowns, rather than a strengthening in labour market conditions."
• Nationally, hours worked decreased by 3.7% in August, considerably more than the 1.1% fall in employment. This highlights the extent to which people who experienced new or continuing lockdowns had reduced hours or no work, without necessarily losing their jobs. Hours worked data continues to provide the best indicator of the extent of labour market impacts and recovery from lockdowns. It shows that hours in New South Wales fell sharply over the lockdown, down by 13.0% between June and August. The data for Victoria also shows how quickly hours can recover, coming out of a lockdown."
• Underutilisation and underemployment also moved higher, as you would expect under the current circumstances.

Fig. 1: Australian Hours Worked

Source: MNI - Market News/Bloomberg

Fig. 2: Australian Underemployment & Underutilisation Rates

Source: MNI - Market News/Bloomberg