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Australia’s unemployment rate jumped to a seasonally-adjusted 7.1 per cent in May, its highest level since 2001, following coronavirus-related lockdowns.

There were 227,700 jobs lost during the month, with a decrease of 89,100 jobs in full-time work and 138,600 people in part-time employment, figures from the Australian Bureau of Statistics showed on Thursday.

The Australian economy lost 835,000 jobs combined in April and May, the ABS said.

The rise in the unemployment rate – from a revised 6.4 per cent in April – reflects the ongoing impact of strict social distancing measures imposed from late March that led to widespread business closures.

Economists had, on average, expected the unemployment rate to jump to 7.0 per cent, with about 100,000 jobs lost in the month.

While steep, the unemployment rate masks the extent of the impact of coronavirus, given the ABS data’s focus on people looking for work.

The weak job market conditions were reflected in the participation rate – or the percentage of people looking for work, dropping by 0.7 percentage points to 62.9 per cent, the lowest level since January 2001.

It was underlined by an underemployment rate of 13.1 per cent, down 0.7 percentage points and an under-utilisation rate – or the rate of people looking for more working hours – rising 0.1 percentage points to 20.2 per cent.

The jobless rate would have been even higher at 9.6 per cent had people not stopped looking for work, the ABS said.

It estimated that a combined 2.3 million people – or one in five employed people – were affected by either job loss between April and May or had fewer hours than usual in May.

The impact was also likely capped partly due to the JobKeeper wage subsidy program under which businesses keep workers on their books during the crisis with a fortnightly payment of $1500.

All states reported a rise in unemployment.

The biggest jump was in Western Australia, where the jobless rate rose to 8.1 per cent from 6.1 per cent.

Queensland and South Australia hit 7.9 per cent, Northern Territory rose to 7.4 per cent while NSW ticked up slightly to 6.4 per cent, from 6.3 per cent.

Victoria’s unemployment rate also rose to 6.9 per cent from 6.0 per cent.

The Australian dollar slipped on the news to as low as 68.36 US cents. It was trading at 68.58 US cents by 1300 AEST from 69.09 US cents at the close of trade on Wednesday.