Australian immigration is skyrocketing much faster than the number of new jobs, revealing just how heavily population growth is being relied on to prop up the economy.
Unemployment in June held at a 48-year low of 3.5 percent, with 32,600 new jobs created.
But this was well below the 49,100 increase in Australia’s working-age population, mainly due to high immigration.
A 2.8 percent increase in the number of working-age people, over the past fiscal year, could see Australia overtake Canada as having the fastest-growing population in the rich world.
ANZ’s head of Australian economics, Adam Boyton, said job creation was lagging behind immigration levels.
“Job growth has lagged behind population growth in the last six months,” he said.
Australia’s immigration levels are growing much faster than the number of new jobs, raising questions about relying on strong population growth to prop up the economy (Sydney’s Wynyard train station pictured)
A closer look at the official data showed that in June, Australia’s population aged 15 and over increased by 49.100 to 21.774 million, up from 21.725 million in May.
During the year, Australia’s working-age population grew by 591,000, up from 21.183 million.
Both sides of the policy have relied on high immigration to create more demand for goods and services in the economy and avoid a recession.
The Treasury expects a record 400,000 immigrants to have moved to Australia in 2022-23, with 1.5 million new arrivals in the five years to June 2027.
These forecasts take into account permanent arrivals and departures.
Deloitte Access Economics calculated that without high immigration, the economic output of each worker was virtually unchanged from 2021, when Sydney and Melbourne were in lockdown.
“The outlook is much worse when you remove the effect of higher population growth,” it said in its Business Outlook report released late Thursday.
“This means that by 2025, economic output per person (a crude measure of productivity) will have barely moved from the levels seen in 2021.”
Stephen Smith, a partner at Deloitte Access Economics and an author of the report, said this meant Australia was likely to enter a per capita recession within two years, where output per person receded.
This is different from a technical recession, defined as the contraction of gross domestic product for two consecutive quarters.
“The outlook is much worse when you remove the effect of population growth,” he said.
‘A deep per capita recession is expected in the next two years.
Unemployment in June held at a 48-year low of 3.5 percent, with 32,600 new jobs created. But this was well below the 49,000 increase in Australia’s population, mainly due to high immigration (a traffic signalman in Sydney is pictured)
“In 2025, economic activity per person in Australia is expected to be similar to that of 2021, indicating that prosperity has stalled.”
Economic activity per person is forecast to fall by 0.5% in both 2023 and 2024.
While unemployment in June held at 3.5 percent, Deloitte Access Economics expects the jobless rate to average 4.1 percent in 2023-24.
In a job market of 14.55 million people, that would mean 596,571 would be out of a job by June next year, up from 504,400 when 92,170 employees lost their jobs.
A record 387,000 immigrants moved to Australia in 2022, adding to the demand for housing.
Australia’s population growth rate of 1.9%, spanning all age groups, is also among the highest in the developed world.
Among first world nations, only Singapore had a faster population growth rate of 3.4 percent, followed by Canada’s 2.7 percent.
The Reserve Bank of Australia has raised 12 interest rates since May 2022, bringing the cash rate to an 11-year high of 4.1%.
Smith said these rate increases would make the housing crisis worse.
“Higher rents and house prices due to a handbrake on home construction cannot be easily resolved with higher interest rates,” he said.
