A sub-four per cent unemployment rate and only a modest rise in the number of people employed suggests record levels of job vacancies will go unfilled for now, economists say.
The April labour force report showed the jobless rate was 3.9 per cent in April, unchanged from a downwardly revised result for March.
However, just 4000 people joined the workforce in April, well short of the 30,000 increase economists had been expecting.
The 3.9 per cent rate remains the lowest level for unemployment since August 1974, when the survey was conducted quarterly.
KPMG senior economist Sarah Hunter said the economy is now effectively operating with “no spare capacity”.
“Despite job adverts remaining at record highs and a higher-than-average proportion of businesses looking to bring people on, employment increased by just 4000 over the month,” Dr Hunter said.
“Given the continued strength in demand and limited additional domestic supply of workers, it is likely that wages growth will accelerate from here.”
Full-time employment jumped by 92,400 in April, but was mostly offset by an 88,400 drop in part-time workers.
Prime Minister Scott Morrison, campaigning in northern Tasmania on Thursday, said people being in jobs was the most important thing for the economy.
“If you don’t have a job, you don’t have choices,” he told reporters in Launceston before the release of the figures.
Even so, businesses are struggling to find sufficient staff.
There has been a steady decline in the unemployment rate since it hit 7.4 per cent during the COVID-19 recession, in large part due to the lack of skilled migration as international borders were kept shut.
Australian Retailers Association CEO Paul Zahra says there are more than 29,000 job vacancies in the retail sector alone.
“Without the usual numbers of overseas workers and students, these gaps won’t be filled using traditional recruitment methods,” he said.
Mr Zahra supports calls for the gaps to be filled by pensioners and mature aged workers, who should be allowed to supplement their income and be exempt from the age pension income test.
Aside from staffing problems, retail businesses are also feeling the impact of ballooning inflation pressures.
“We’re also seeing many households start to tighten their budgets with interest rates now on the rise,” Mr Zahra said.
Even so, retailers enjoyed a solid sales period during April, buoyed by the Easter holidays and the further easing of COVID-19 restrictions.
According to the Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment, retail sales rose 9.9 per cent in April compared to a year earlier, led by a 20.3 per cent jump in electronics sales.
The unemployment rate will fuel expectations of a further rise in the cash rate when the Reserve Bank of Australia board meets in June.
However, Wednesday’s sluggish wages figures suggest the RBA will not be lifting the cash rate by any more than 25 basis points, matching its first increase in a decade earlier this month as it fights ballooning inflation.
The minutes of the May RBA board meeting released on Tuesday showed there had been some discussion on raising the cash rate by a larger than usual 40 basis points.
But with wages growing by just 0.7 per cent in the March quarter to an annual rate of 2.4 per cent – less than half the rate of inflation at 5.1 per cent – economists see little urgency for a big hike at this stage.
© AAP 2022
