FXStreet reports that economist at UOB Group Lee Sue Ann assessed the latest labour market report in the Australian economy.

“The Australian economy lost another 227,700 jobs in May, significantly more than the 78,800 losses consensus was expecting, and following the revised 607,400 losses (594,300 losses previously) in April. This is the second-largest monthly loss of jobs on record, way ahead of the third biggest of 65,400 job losses in October 1982.”

“The unemployment rate soared to 7.1% - the highest since October 2001, when 7.2% of the labour force was without work – from a revised 6.4% (6.2% previously) in April, worse than expectations for 6.9%. The participation rate continues to fall, from a revised 63.6% (63.5% previously) to 62.9%, the lowest level since January 2001, reflecting the fact some Australians have given up on the idea of work altogether in the current economic climate.”

“Earlier in June, Treasury Secretary Steven Kennedy told the Senate’s COVID-19 committee it had updated its forecast to suggest Australia was on track for 8% unemployment in the September quarter, down from expected peaks of up to 10%. It was also revealed that Australia's true jobless rate would be almost double, as the JobKeeper wage subsidies program disguised the real number of people without work.”

“More importantly, today’s job figures intensify the political debate about how to handle the expiry of the JobKeeper program and whether Australians are best supported by wage subsidies or the jobseeker unemployment payment. The government has stressed at the peak of the COVID-19 pandemic that a wage subsidy was required to keep workers connected to their jobs whilst the economy entered a period of hibernation, but PM Morrison is now signaling the welfare system is the way to help Australians into “real jobs” during the recovery. He added that the government was awaiting further data before deciding how best to balance the programs. The change is expected to be included in an economic statement on 23 July.”