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AUSTRALIA: VIEW: Goldman Sachs note that "timely labour market indicators - have
all deteriorated sharply over recent weeks in response to the coronavirus
crisis. While this weakness will flow through to Australia's official Labour
Force Survey over the coming months, several unique features of the current
crisis require a more nuanced analysis of slack in the labour market. In our
view, the standard unemployment rate, which we forecast will rise 3.25pps to
8.5% by mid year, will significantly understate the amount of spare capacity in
Australia's labour market. This is because many workers will be nominally
employed under the Government's 'JobKeeper' wage subsidy program - but working
very few hours - while others will leave the labour force and collect the
Government's expanded 'JobSeeker' welfare payment. While the outlook remains
highly uncertain, we estimate this 'effective' unemployment rate will rise from
5.25% currently to ~19% by mid-2020 (implying 1/5 of potential hours lost) -
well above levels reached in prior recessions. To be clear, there are large
uncertainties around both the degree of labour market disruption and measurement
issues related to the surveys."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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