Employment figures out last week painted a rosy but retrospective picture of Australia’s economy in the July quarter. Our unemployment rate fell to 4.6 per cent in July, down from 4.9 per cent, with the number of unemployed people falling by 39,900.
These results may have brought back a bit of nostalgia for many for the good old days of the first half of this year. If we only knew how good we had it!
Sadly, these figures do not accurately reflect the current reality facing Australia’s economy. As lockdowns drag on the economic cost mounts. GDP is expected to decline in the September quarter and there will undoubtedly be some increase in the number of Australians unable to find work.
But we should allow ourselves to take some confidence in the knowledge that our economy bounces back strongly once lockdowns are lifted. We just have to look at the experience of 2020 to reassure ourselves of that fact.
This time last year the July 2020 quarter’s results recorded a big jump in the unemployment rate, which rose to 7.4 per cent. A quarter later, as lockdowns were wound down, this quickly fell to 6.8 per cent and has continued to decline steadily.
The Reserve Bank also shares this faith, expecting a resumption of economic expansion and maintaining scenarios which point to lower unemployment rates in 2022.
While the months ahead will be challenging, we should have confidence that our economic fundamentals are sound and that we can recapture momentum as restrictions ease.