Unemployment rate expected to fall again

Scott Morrison will have plenty to crow about if economists are right and the unemployment rate fell again in April.

But businesses are less enthused than the prime minister as they struggle to find appropriate staff.

The Australian Bureau of Statistics will release the labour force report for April on Thursday, the final major economic report before voters go to the polls on Saturday.


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Economists expect the report will show the jobless rate fell to 3.9 per cent, its lowest level since 1974, and down from four per cent in March.

Employment is expected to rise by 30,000 in the month.

There has been a steady decline in the unemployment rate since hitting 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 as a result of the pandemic.

Australian Retailers Association CEO Paul Zahra says there are more than 29,000 job vacancies in the retail industry alone.

“Without the usual numbers of overseas workers and students, these gaps won’t be filled using traditional recruitment methods,” Mr Zahra says.

He supports calls for these gaps to be filled by pensioners and mature aged workers, and allow them to supplement their income by exempting them from the age pension income test.

A further decline in 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 suggests the RBA won’t 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.

However, Barrenjoey Research chief economist Jo Masters says the case to lift monetary policy from crisis settings remains.

“We continue to expect the RBA to raise rates by 25 basis points at the June meeting, taking the cash rate to 0.6 per cent, and to 1.60 per cent by year end,” she said.

© AAP 2022