Unemployment has been at historic lows, but demand for workers is weakening as higher interest rates bite.
Nearly a quarter of NSW businesses across all major industries and regions plan to cut staff over the next three months as higher interest rates take a toll on consumer spending, sapping the demand for labour.
Margo Hendriks, owner of Office of Hair in Sydney’s CBD, with employee Holly Riordan. Hendricks says business conditions are inconsistent.After falling to 2.9 per cent in June, the NSW unemployment rate jumped to 3.3 per cent in July.
“While the worries about interest rates are subsiding, consumers’ reluctance to spend remains a key risk to the business outlook,” he said.Margo Hendriks, who owns the Office of Hair salon in Sydney’s central business district, said demand for her services has been inconsistent.Hendriks has been grappling with changes in consumer behaviour since COVID-19, especially the decline in workers travelling to the CBD, which, she says, has slashed the size of her business.
Hunter said the labour shortages that followed the disruptions of COVID-19 meant many employers were now “hoarding” staff, even though it was cutting into profit margins.Women workers were worst affected by the July jobs slump in NSW; the number of women seeking a job rose by 16,300 and the female unemployment rate jumped from an unusually low 2.6 per cent in June to 3.4 per cent. Male unemployment in NSW was virtually unchanged in July.
“There are more and more signs consumers are cutting back on their spending and, when that happens, companies eventually have to slow their hiring or reduce their workforce,” he said.reduced the chances of further interest rate increases by the Reserve Bank.
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