Australia enjoys a strong economic comeback after the COVID-19 induced recession. While not out of the woods yet, the future economic perspectives look a little brighter in that part of the world.
Before going into more details, it is worth mentioning that New Zealand, Australia’s close neighbor, was declared a “virus-free” nation. Unsurprisingly, New Zealand’s GDP bounced back to the pre-crisis level, in a clear V-shaped recovery.
If Australia follows on similar tracks, we should not be surprised to see the economy recovering as well. The positive economic data is even more staggering if we consider that vaccines have not been delivered yet either to New Zealand or to Australia. The two countries show the world that the virus can be controlled if only leaders and the population would listen to science and do their part.
Australian Unemployment Rate Falling Below 7%
Yesterday’s jobs data release showed significant improvement in the month of November. To start with, the Australian economy added more than double the number of jobs the economist predicted it would. More precisely, on 40.9k new jobs expected, the economy delivered 90k. As such, the declining unemployment rate being below 7% came as no surprise, printing 6.8% for the month of November.
The good news did not stop at the headlines. A closer look reveals much more. For example, the participation rate increased to 66.1%. This is particularly important in interpreting the unemployment rate. For instance, if the unemployment rate declines and the participation rate declines too, then the good news provided by the unemployment rate should be taken with a grain of salt. After all, fewer people participate in the job force and enter the unemployment rate calculation. Therefore, last month’s increase in the labor participation rate reinforces the decline in the unemployment rate.
Underemployment decreased too. Underemployment shows the number of people accepting jobs below their qualifications. For example, an economist accepting a job as a FedEx delivery agent, because they are finding it difficult to get a job according to the qualifications held.
Naturally, the Australian Dollar (AUD) could not remain indifferent to the data. It rose to a 2020 high against the U.S. Dollar (USD) and gained ground against the Euro (EUR), too, particularly important as the Euro is one of the strongest currencies in 2020.