Newcastle's unemployment rate has hit 10 per cent for the first time in 17 years and a record number of people in the city are now without a job.
Australian Bureau of Statistics figures issued on Thursday show the Newcastle jobless rate was 10 per cent in May, up from 7.8 per cent in April and 3.1 per cent in May 2019. The national unemployment rate was 7.1 per cent in May and the NSW rate was 6.4 per cent.
The last time Newcastle's jobless rate hit double figures was in January 2003.
The Newcastle Herald reported last month that 26,000 jobs had been lost in March and April across the Hunter, including 16,000 in Newcastle, as coronavirus restrictions decimated the region's labour market.
Experts speculated that the April jobless rate of 7.8 per cent in Newcastle was artificially low because many people had left the labour market to care for children or because there was little prospect of finding work.
The latest ABS figures show 5600 of those people in Newcastle have returned to the labour force, which includes the employed and those looking for work.
The workforce participation rate, a measure of those working or seeking work, fell nationally last month by another 0.7 percentage points to 62.9 per cent, the lowest mark in 19 years.
But Newcastle defied this trend as participation jumped from 61.0 to 62.8 per cent, swelling the number of unemployed from 14,800 in April to 19,400. It is the highest number of unemployed in the city since the ABS started issuing labour force survey data in 1998.
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The jobless rate might have climbed alarmingly, but the number of Newcastle people in work rose by 1000 in May to 175,300, defying a worse-than-expected national decline of 227,000.
The slight rise in employment supports figures issued last week which showed the Newcastle jobs market had bounced back faster in May than in the rest of the nation.
The total number of jobs in Newcastle jumped 2.4 per cent last month, well above the national rise of 1 per cent.
Hunter Research Foundation Centre economist Dr Anthea Bill said the jobless rate was sobering but the latest data had a silver lining.
"The reason we're seeing the Newcastle unemployment rate go up so much is that we bucked the national and state trend of a further fall in an already very low labour force participation rate," she said.
She said participation rates tended to increase as the economy improved.
"This is not such a bad sign for Newcastle. I'd say overall, however, a month's movement is too early to call."
The rest of the Hunter, outside Newcastle, appears to have reacted differently to the pandemic and more in keeping with the state and national picture.
The overall labour force in the rest of the Hunter continued to shrink, from 145,000 in March to 139,000 in April and 135,000 in May.
The workforce participation rate fell another 1.8 percentage points, from 61.9 to 60.1 per cent.
The jobless rate for May in the Hunter outside Newcastle was a relatively healthy 6.0 per cent, up from 5.1 per cent in April, and the ranks of the unemployed rose slightly, from 7100 to 8100.
The number of people in work fell another 5000 from April to May, but the drop in workforce participation softened the impact on the unemployment rate.
The rate could spike later when people return to the labour market.
Dr Bill said the 3.8 per cent fall in the number of people in work in the rest of the Hunter in May was significantly worse than the state decline of 1.3 per cent and national drop of 1.5 per cent.
"I'd suggest one reason for that poorer performance is that it includes places which are more tourism dependent than in Newcastle and Lake Macquarie," she said.