Australian Unemployment Rate; Early Job Gains Lulled the Country into a False Sense of Economic Security.

14th September 2021

The Australian Unemployment Rate is the percentage of the total workforce in Australia that is unemployed and actively seeking employment during the previous month. Its impact is evident in the economic outlook because the number of unemployed people is a significant indicator of the overall economic health, as consumer spending is highly correlated with labor market conditions.

In Australia, the Unemployment Rate Figure is often published by the Australian Bureau of Statistics (ABS). This gives a strong preview of the economy’s well-being because the economy is 100% efficient when employment thrives fully.

Australia was, until recently, heralded for its effective suppression of Covid-19 through strict border closures, prolonged lockdowns, and its fortune as a remote island continent, the country was able to avoid a large-scale outbreak, however, the delta variant has turned that success upside down.

At the end of 2020 and start of 2021, Australia’s economy bounced back strongly from the initial phase of the covid-19 pandemic, recording a growth of 3.1% in the December quarter and 1.8% in March, that momentum slowed considerably in the June quarter, as Delta strain was introduced to Australia with more than a thousand new cases recorded daily.

Australia has enjoyed 13 consecutive months of declines in the Unemployment Rate, most recently from 5.0% to 4.6%. Seasonally-adjusted employment rose by 2,200 in July, following 29,100 jobs added in June, that smooth progression is more likely to be betrayed with the resurgence of Covid-19 even though July’s result was driven by an increase in part-time employment more than offsetting a decline in full-time employment.

Australia’s hopes of avoiding a technical recession now rest on the possibility of growth in the December quarter after the national plan to reopen once vaccination rates reach 70% and 80% has softened. According to Australia’s federal Treasurer Josh Frydenberggiven the extensive lockdowns, there would be challenging and difficult days ahead, although June’s result showed Australia’s economy was resilient and its fundamental remains sound”. He expects the economy to contract by at least 2% in the September quarter.

The positive remains that very accommodative financial conditions will continue to support the recovery of the Australian economy, as borrowing rates and sovereign bond yields are at very low levels and the exchange rate has depreciated over recent months. The fiscal response by the Australian Government is also providing welcome assistance in supporting household and business balance sheets. More so, vaccination has progressed in recent weeks, thanks to the growing supply of the Pfizer vaccine and increased motivation to get out from extended lockdowns. Currently, 39% of eligible Australians are fully vaccinated and 64% have had at least one dose of the vaccine.

Economists project the Unemployment Rate to average 7.2% in 2021, down 0.1% from last month’s estimate and 6.2% in 2022. Regardless, traders should brace themselves up for a period of high volatility as the Unemployment report often has a great impact on the FOREX market. A decrease in Unemployment Rate will usually strengthen the AUD (Australian Dollar), while an increase in the unemployment rate will usually weaken the AUD (Australian Dollar).

Traders should always be aware that volatile markets provide great opportunities for making profits, as an increase in volatility can cause market swings for traders to capitalize on.

The currency pairs that include the AUD (Australian dollar) are mostly affected by the data release. The pairs include AUDUSD, AUDCAD, AUDCHF, AUDJPY, AUDNZD, etc.

Time Schedule for the next AUD Unemployment Rate Report:

Date: Thursday. September 16th, 2021.

Time: 2:30 am (GM + 1).

Author:
Francis Idowu is a Forex Dealer, Financial market analyst and writer, Data Analyst, and Financial Market Strategist with a background in Economics. He specializes in market strategies, Forex fundamental and technical analysis, and has spent over two years as a financial market contributor, observer, and trading coach. He is well known for his informative analysis of the global economy, fiat currency, commodities, Stocks, Indexes, Futures, and Options markets. He held a Bachelor's degree in Economics and Diploma in Structured Programming and Data processing.

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