Australian Unemployment Rate Remains Unchanged in September, Job Market Stays Tight

Labourers work at a construction site in Sydney, Australia, on June 18, 2020. Saeed Khan/AFP via Getty Images

Australia’s unemployment rate stabilised at 3.5 percent in September, with a slight increase in the number of employed people.

Data from the Australian Bureau of Statistics (ABS) showed that employment rose by 900 in the month, far below the 33,500 recorded in August, while the number of people without a job climbed by 8,800.

In addition, the participation and underemployment rates remained stable at 66.6 percent and six percent, respectively.

“With employment increasing slightly, by around 1000 people, and the number of unemployed increased by 9000, the unemployment rate rose by less than 0.1 percentage point but remained at 3.5 percent in rounded terms,” ABS’s head of labour statistics Bjorn Jarvis explained.

Treasurer Jim Chalmers suspected that the low jobless rate was due to COVID-related absences, which caused employers to increase their workforce to make up for workers on sick leave.

“One of the reasons we’ve had unemployment so low is because employers have had to try and build bigger workforces to make up for what has been a lot of absenteeism, COVID-related and otherwise,” Jim Chalmers told ABC radio.

Job Market Shows Signs of Cooling off

While the September labour force figures indicated that the job market was still competitive, there were signs of cooling off in job ads and vacancies.

A report by online employment marketplace Seek showed that job ad volumes fell 5.2 percent in September. However, the figure was still 15.5 percent higher than a year ago.

“Since May, there have been small declines in ad numbers, but not enough to call an end to the incredibly tight market,” Seek’s Managing Director Kendra Banks said.

“All sectors are still at higher job ad volumes than they were pre-pandemic.”

Workers lay concrete at the construction of a new apartment block in Melbourne, Australia, on June 5, 2018. William West/AFP via Getty Images

At the same time, advertised salaries measured by the company dropped slightly in August, which suggested that the competition for skilled workers was starting to ease.

While there was a two percent decline in job vacancies in the three months to August, businesses were still impacted by labour and skill shortages.

An Australian Institute of Company Directors survey revealed that labour shortages remained one of the country’s top concerns for business leaders.

Central Bank’s Concern over Low Unemployment

While the record-low jobless rate is well-received by the Reserve Bank of Australia (RBA), there are concerns that a tight labour market can spur inflation as it puts more pressure on wages.

In a recent speech, RBA deputy governor Michele Bullock said the record-low unemployment was starting to drive up wage pressures.

She said this was one of the reasons that further interest rate hikes were needed to curb inflationary pressures and bring inflation down to the two to three percent target range.

“Inflation is too high in Australia and is expected to rise further,” she said.

“While a lot of this can be explained by global factors such as supply chain disruptions and energy prices, there is an important element of strong domestic demand.”