Australian Economy

Further unemployment rate fall predicted

Economists are tipping a further drop in the national unemployment rate ahead of the release of crucial labour force figures.

Unemployment is expected to drop from 3.9 to 3.8 per cent when the June jobs numbers are handed down on Thursday by the Australian Bureau of Statistics.

Such a rate would be the lowest unemployment figure for almost 50 years, going back to August 1974.

CommSec economists have forecast the reduction in the unemployment rate would mean 25,000 jobs added to the economy in the past month.

However, NAB analysts foreshadowed jobless figures to drop even further by the end of the year.

The bank’s economists said they expected unemployment to fall as low as 3.7 per cent in 2022 before climbing back to 3.9 per cent in 2023 and 4.3 per cent by 2024.

“Despite the small deterioration, we consider a level around 4.2 per cent as consistent with full employment,” they said in a briefing.

The forecast drop in unemployment comes as labour demand remains strong across the country, with a high level of job vacancies indicative of a strong market.

“Businesses are reporting that it is difficult to find suitable labour and the number of job vacancies relative to the number of unemployed is exceptionally high,” NAB economists said.

“As a result, we expect to see unemployment fall a bit further, but as growth slows, we expect the unemployment rate to move a little above four per cent in 2024.”

The labour force figures will also shed light on the national participation rate, which in May hit a record high of 66.7 per cent.

Underemployment also fell in May from 6.1 to 5.7 per cent, marking a 14-year low.

May saw a rise of 61,000 jobs across the country, with it being the seventh consecutive increase in employment since the easing of COVID-19 lockdown restrictions in late 2021.

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