OECD unemployment rate dips to 6% in August

Jobless rate now 0.7% above pre-pandemic rate

A Now Hiring sign near the entrance to a Ross department store in Hallandale, Florida. Unemployment in the US fell to 5.2% in August. Getty Images

The unemployment rate in Organisation for Economic Co-operation and Development countries dipped slightly to 6 per cent in August from 6.1 per cent in July, leaving it 0.7 per cent above the pre-pandemic rate seen in February last year.

The total number of unemployed workers across the OECD area, which includes eurozone countries as well as the US, Australia, Japan and the UK, fell by 1 million in August to reach 39.7 million, as the global economy slowly recovers from the Covid-19 crisis amid a surge in vaccinations.

However, this figure is still 4.3 million above the pre-pandemic level seen in February last year.

“While the rate remains 0.7 percentage points above the pre-pandemic rate as at February 2020, this latest update represents a continuation of the downward trend since the peak of 8.8 per cent in April 2020, with the exception of April 2021,” said the OECD.

“However, some care is needed in interpreting the fall in the OECD area unemployment rate when compared with the April 2020 peak, as it largely reflects the return of temporary laid-off workers in the US and Canada, where they are recorded as unemployed.”

In the eurozone, the unemployment rate declined to 7.5 per cent in August from 7.6 per cent in July – the fourth consecutive monthly fall – with declines of 0.3 per cent or more in Greece, Finland, Spain, Latvia and Lithuania.

The eurozone's August contraction is the fourth consecutive month of improvement since the near-term peak rate of 8.2 per cent in April, according to Jonas Keck, economist at the Centre for Economics and Business Research.

“The month-on-month improvement in August was slower than in the previous months, however. The eurozone’s unemployment rate is now close to pre-pandemic levels, standing just 0.1 percentage points above the rate witnessed in February 2020.”

Outside Europe, the largest decreases in unemployment were seen in Columbia where the jobless rate dipped to 12.7 per cent in August from 13.6 per cent the previous month and in Korea, with a drop to 2.8 per cent from 3.3 per cent.

In Canada, unemployment fell to 7.1 per cent from 7.5 per cent while the US saw a decline to 5.2 per cent from 5.4 per cent.

“More recent data show that in September, the unemployment rate declined further in the US by 0.4 percentage points to 4.8 per cent,” the OECD said.

While OECD unemployment for people aged 25 and over fell to 5.1 per cent from 5.3 per cent in August, it increased slightly to 12.5 per cent for people aged 15 to 24 following three months of decline.

However, large differences across OECD countries in youth unemployment rates remain, with the figure in Spain at 33 per cent and in Greece at 30.8 per cent compared to 7.4 per cent in the Netherlands and 7.5 per cent in Germany.

While August data for the UK is not available yet, the jobless rate fell to 4.5 per cent in the three months to August, down from its pandemic peak of 5.2 per cent at the end of last year, however this is still above the 4 per cent recorded at the start of 2020.