The unemployment rate has jumped to 4.6 per cent, coming off a 13-year low of 4.5 per cent in August.
Some 138,000 jobs were lost between August and September as a result of severe lockdowns due to the COVID-19 pandemic, according to figures from the Australian Bureau of Statistics (ABS).
“Extended lockdowns in New South Wales, Victoria and the Australian Capital Territory have seen employment and hours worked both drop back below their pre-pandemic levels,” Bjorn Jarvis, head of labour statistics at the ABS, said.
“In September 2021, there were 111,000 fewer employed people (0.9 per cent) and 2.0 per cent fewer hours worked than in March 2020.”
This comes off the back of a 146,300 jobs tumble in August.
The reason the unemployment rate dropped in August despite a large amount of job losses was because people simply gave up searching for work.
The official unemployment figure only counts people who are actively searching for work.
Lockdowns had significant impact
With a combined share of close to 60 per cent of Australia’s employed population, labour market changes in New South Wales and Victoria had a large influence on the national figures.
“In September, there were large falls in employment in Victoria (123,000 people) and New South Wales (25,000 people, following the 173,000 decline in August),” Jarvis said.
The participation rate fell 0.7 percentage points to 64.5 per cent, marking the third consecutive monthly decline from the near historic high of 66.2 per cent in June 202.
There has been a continued pattern of large falls in participation during lockdowns.
“The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions,” Jarvis said.
On the flipside, hours worked increased by 0.9 per cent in September, a slight recovery from the fall in August.
Job prospects on the horizon
There are already signs that the labour market is turning around after the latest SEEK Employment Report found that job ads increased 6 per cent in September.
This was the first increase since April and a positive sign for future employment as the country begins rolling out reopening efforts.
NSW saw a particularly strong 20.6 per cent rise in job ads for the month, with roles in hospitality and tourism surging 130 per cent since August.
Treasurer Josh Frydenberg believes there is now "light at the end of the tunnel", with NSW out of lockdown and Victoria to follow suit later this month.
The ACT is also on track to reopen on Friday.
However, Frydneberg has warned that the widely expected economic contraction in the September quarter could be 3 per cent or more.