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The Australian unemployment rate shot up to 7.1% in May as another 227,000 jobs were wiped out

Jack Derwin
·2-min read

Australia's soaring unemployment rate is showing no signs of slowing down.

Official data on Thursday showed another 227,700 jobs were lost in May, rocketing unemployment another full percentage point higher to 7.1%.

The result was worse than expected, with forecasts pointing to less than half of those losses for the month. Nearly 90,000 of those job losses were full-time, with a further 138,000 part-time jobs getting the chop.

It's seen the unemployment rate jump nearly 2% in the space of as many months, a troubling sign for the Australian economy as the full impact of government restrictions are beginning to emerge.

It's not over, either. Despite significant reopening taking place in June and July, Treasury expects unemployment will eventually end up at 8%.

That would see hundreds of thousands more people out of work, with diminished prospects of returning to the labour force.

Many have already left it, after all. The participation rate – the percentage of Australians actively looking for work – continues to fall, reflecting the fact some Australians have given up on the idea of work altogether in the current economic climate.

Such a departure has seen the headline unemployment rate be tempered. IFM Investors chief economist Alex Joiner points out that if those axed workers were all looking for a job, reported unemployment would actually be far higher.

"If the [participation rate] had stayed at January's high of 66.1% the unemployment rate would sit at 11.6% – arguably a truer reflection of the labour market dislocation currently occurring," he said in a tweet.

https://twitter.com/IFM_Economist/status/1273431652862013442

If that all sounds a bit complex, consider this handy colour-coded chart, with the sharply falling black line showing how much kinder official figures are compared to the reality.

https://twitter.com/CallamPickering/status/1273431582510989313

The rising headline unemployment figure has been weighed down by the federal government's $70 billion JobKeeper program, which has helped keep people technically in employment if they aren't working.

However, given it is currently under review and could begin to be rolled back from September, there could be more heartache coming for Australian workers.