Prime Minister Scott Morrison is bracing for another set of “heartbreaking” employment figures but says there are signs the economy is on its way back from the coronavirus pandemic.
There have been signs the impact on unemployment will not be as bad as first feared, but economists expect the jobless rate will leap to seven per cent when May data is released.
It would be the highest rate in 21 years.
In April, the unemployment rate jumped to 6.2 per cent from 5.2 per cent, the biggest month-on-month rise on record, as almost 600,000 people lost their jobs.
Economists expect a hefty fall of about 100,000 in the number of people employed in May.
“We’re in a recession and when you are in a recession, they are the sort of heartbreaking numbers we have to deal with and we still have a long way to go,” Mr Morrison told 2GB radio on Thursday.
“But it is good to see more and more businesses opening up now, the restrictions are coming off and I think people do get a sense we are on our way back.”
He noted consumer confidence had recovered from a huge jolt a few months ago when people were expecting the worst from the crisis, and business confidence had also improved.
April’s labour force figures were complicated by the impact of the JobKeeper wage subsidy and the many Australians who left the workforce altogether not being counted in the unemployment tally.
“Australia’s unemployment rate masks severe underemployment and the hundreds of thousands of people that have either dropped out of the labour force or are working zero hours,” shadow treasurer Jim Chalmers told AAP.
But Employment Minister Michaelia Cash said while the government expected the unemployment rate to grow in coming months, recent data had shown some employers were starting to hire again.
She pointed to Australian Taxation Office payroll data that showed about 124,000 jobs were added in May.
“While Australians and the economy have a long way to go in terms of a full economic recovery, this data shows we are making progress,” Senator Cash told AAP.
Treasury secretary Steven Kennedy expects unemployment to reach eight per cent by September.
A new Deloitte Access Economics report expects rising unemployment will impact on spending, which will see retailers suffer a 1.4 per cent drop in turnover growth in 2020, the worst year on record.