The pace of the job market recovery has been much quicker than the Reserve Bank of Australia (RBA) had originally predicted. In May 2020, the RBA forecast that the unemployment rate would peak at 10%. However, since July 2020, when it hit 7.5%, the unemployment rate has been on a steady decline reaching 5.6% in March 2021. This decline reflects the stimulus from the Government, RBA, as well as a relatively successful strategy in managing the pandemic.
Looking ahead, there are signs of business resilience. Firstly, according to the National Australia Bank business survey, business confidence reached an all-time high in March 2021. Secondly, the latest job vacancies survey from ABS was very strong, with February 2021 vacancies 26.8% higher than a year ago. And finally, despite the end of JobKeeper, the RBA has continued to lower its unemployment forecasts, predicting that the unemployment rate will revert to pre-pandemic levels later this year (Figure 2). While there is still considerable uncertainty created by the pandemic, the rapid recovery in the Australian labour market has been a very welcome development.