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Australia’s labor market remains strong amid COVID lockdowns By Reuters

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© Reuters. FILE PHOTO: A man reads job advertisements in a newspaper at a cafe in Sydney, Australia on May 9, 2016. REUTERS / David Gray / File photo

By Wayne Cole

SYDNEY (Reuters) – Australian job announcements extended their record streak in June as demand for labor remained strong despite a round of coronavirus lockdowns across the country, a sign that any roadblocks to the economy will likely be fleeting.

Other data released on Monday showed that retail sales beat forecasts in May with a 0.4% increase, while new vehicle sales held firm in June, a promising omen for consumption.

Approvals to build new homes fell 7.1% in May from the previous month, but that followed months of gains that still left approvals up 53% from the previous year.

Figures from the Australia and New Zealand Banking Group showed that job postings were up 3.0% in June from May, when they were up 6.8%. That was the thirteenth consecutive month of earnings and showed growth of 129% compared to the previous year, when the job market was recovering from a national pandemic lockdown.

“Recent history shows that workers laid off or retired during closures tend to be reinstated or find new jobs quickly once restrictions are lifted, given the underlying strength in the labor market and overall demand,” said the senior economist at ANZ, Catherine Birch.

The poll came on the heels of government data on vacancies released last week, which showed a whopping 23% increase in the three months through May.

“Vacancies are twice their pre-pandemic level, and there are now 1.9 people unemployed per vacancy, easily the lowest on record,” Birch said. “This suggests that the unemployment rate has a lot more to go down.”

Unemployment has already fallen much faster than authorities expected, reaching 5.1% in April, below the pandemic peak of 7.5% reached in July last year.

The Reserve Bank of Australia aims to reduce unemployment to 4% or even lower in hopes of finally raising wage growth and inflation after years of tepid earnings.

The central bank holds its July policy meeting on Tuesday and employment resilience should provide the confidence to moderate its massive stimulus program.

Analysts expect it to not extend its yield target to three years until the end of 2024, but it will announce another round of bond buying, perhaps in a more flexible way.

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