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Australian labour market stumbling along – no case to withdraw support yet

The latest data from the Australian Bureau of Statistics – Labour Force, Australia, January 2021 – released today (February 18, 2021), shows that the labour market is stumbling along and the pace of recovery has slowed considerably. Employment increased by 0.1 per cent (29,100) in the month, half the growth that was recorded in December 2020. Unemployment fell by 34,300 to 877,600 persons and the unemployment rate fell by 0.2 points although that was largely due to the decline in the participation rate. Underemployment also fell by 0.4 points and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.6 points, but some of that is due to the special monthly hour movements in January. The main uncertainty now is that the recovery is slowing and the current (extensive) government support is due to end in March 2021. Given the labour market is still quite a margin from where it was in March 2020, the idea that the government would withdraw its fiscal support is not a compelling option. Overall, the recovery is still too slow and more government support by way of large-scale job creation.

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