Weekly economic briefing - 20 April 2021
A personal view on topical financial and economic issues by David Rumbens
Employment passes go...
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
Further, strong jobs growth is good news for consumers and the economy. Consumer confidence is the highest it’s been since August 2010, while business confidence continues to rise off the back of supportive business conditions. Confidence has been supported by the strong jobs rebound, fewer snap lockdowns more recently, and strong growth in the housing market. So far, consumer confidence has not been affected by Australia’s slow vaccine rollout, which remains behind most of the world, though clearly that remains a risk going forward which may weigh on consumer confidence.

Chart 2: Australian consumer confidence index
Deloitte’s Global Consumer Survey provides a range of additional perspectives on the Australian consumer confidence story. Alongside general consumer sentiment rising on the back of economic performance, moderating personal safety and health concerns are a positive aspect. Australians feel more at ease ‘going to the store’ and ‘engaging in person-to-person services’ as seen below – an improvement that is supporting the recovery in sectors such as food and accommodation which were hurt significantly by restrictions and state lockdowns. That should assist with not only greater willingness by consumers to dip into the savings they have accrued through 2020, but also to broaden their patterns of spending to incorporate a greater amount of spending on services.

Figure 1: Deloitte Global Consumer Survey – Australian response, March 2021
For any questions/comments on this week's Briefing, please contact:
Partner, Deloitte Access Economics
Tel/Direct: +61 3 9671 7992

Michelle Shi
Graduate, Deloitte Access Economics
Tel/Direct: +61 3 9671 6264
WorldClimate: Climate change is not a choice. It’s billions of them.

We believe in the science of climate change and the economic and commercial risks inaction poses to our society, economy, communities, and businesses.
Read more Deloitte Access Economics Publications
Produced twice a year, Budget Monitor is the only source of accurate and independent projections of Federal Budget trends in Australia. 
A quarterly publication aimed at those who require depth of detail about the business environment, analysing prospects across 22 industries and each of the Australian States and Territories.
A quarterly publication that provides detailed data on the construction sector - the most cyclical of Australia's major economic drivers.
A quarterly publication that provides analysis of the current state of retail sales and consumer spending, and the major trends likely to emerge over coming years.
A quarterly publication that provides forecasts and commentary for each industry, plus white collar, blue collar and office demand index.
Strengthen your business and strategic planning capabilities with our comprehensive analysis of trends and underlying drivers influencing the Australian tourism and hotel sector.
Deloitte Touche Tohmatsu

Grosvenor Place
225 George Street
Sydney NSW 2000

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.

© 2021 Deloitte Touche Tohmatsu (ABN: 74 490 121 060)