SYDNEY--Australia's economy shed a further 227,700 jobs in May, causing the unemployment rate to surge to 7.1% as Covid-19 lockdowns continued to undermine business confidence and cripple activity.
The savage drop in employment compared with an expected fall of 75,000, the Australian Bureau of Statistics said Thursday.
The drop in employment added to a 600,000 fall in April, bringing the total to 835,000 since March.
The increase in the unemployment rate was tempered by larger than usual numbers of employed and unemployed people leaving the labor force, the ABS said.
This was reflected in a further fall in the participation rate, when fell 0.7 percentage points to 62.9% in May.
The pandemic has pushed Australia's economy into its first recession in 29 years but some signs of recovery are beginning to emerge. Consumer confidence and spending data are looking more positive in recent weeks.
Australian health authorities have been successful in containing the virus, with steps now being taken to reopen key parts of the economy.
Major banks have recently revised their expectations for gross domestic product growth in 2020 upward but few are expecting a V-shared recovery as it will likely take years to repair the damaged job market.
Focus is now on Canberra to see if Treasurer Josh Frydenberg will extend the government's 70 billion Australian dollar (US$48.18 billion) wage-subsidy scheme beyond its September end date.
Reserve Bank of Australia Gov. Philip Lowe has warned that wage-subsidy support may well be needed for longer, noting that official interest rates are as low as they can reasonably be expected to go.
Write to James Glynn at james.glynn@wsj.com
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Australia's unemployment continued to rise in May - MarketWatch
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