VIEW: Goldman Sachs note that "timely.....>

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."