Data for March 2021 shows that the labour market has continued its remarkable recovery: employment and hours worked have both returned to (and surpassed) pre-COVID levels. The unemployment rate continues to fall, reaching 5.6% in March, the participation rate has increased to an historic high of 66.3%, while underemployment has also fallen to the lowest it’s been since 2014 (7.9%).
This increasing strength in the labour market is great news for the economy and provides reassurance that the end of JobKeeper last month may be less disruptive than previously expected. This is supported by positive forward indicators, with online job ads hitting a 12-year high in March, jumping nearly 20% in the month.
It is also important to note that Australia’s labour market recovery is world-leading. Employment in the US and Canada is still well below where it was in February last year. Australia has also outpaced Japan and the UK in recovery, even though both countries experienced significantly smaller employment shocks through 2020. It appears Australia’s more restrictive COVID measures have sped up our return to normality, while other countries still grapple with ongoing heavy restrictions to mitigate COVID transmission.
Chart 1: Change in employment from February 2020