The unemployment rate for April 2022 remained steady with the revised March 2022 rate of 3.9 per cent. There appears to be very little slack remaining in the employment market, with employed people only increasing by 4,000 people (0.03 per cent) despite a record number of jobs being available. Youth (15-24 yr olds) unemployment also increased by half a percentage point, although it is still at historically very low levels. Regardless, given the number of jobs available, this suggests there is a mismatch of skills required for jobs available and the unemployed. This structural issue in the labour market may indicate that unemployment is as low as it can go.
Despite the lowest unemployment figure since 1978, we don’t expect to see any significant increase in wages growth until the September quarter data comes through, as wages move at a glacial pace compared to inflation. Coupled with rising interest rates, this means that many wage earners will find the next six to 12 months in particular very challenging, and we are likely to see continued negative movements in consumer confidence.
A further negative outlook on the horizon could come in the form of pain in the construction sector. Whilst the sector is desperate for workers currently, we expect a slowdown in employment here as more insolvencies come to pass, and rising input costs and fixed price contracts weigh heavily on profitability and solvency. The sector employs roughly nine per cent of Australian workers.