Australians are choosing to exit the workforce while the lockdowns continue to impact the south east of the country.
Latest figures from the Australian Bureau of Statistics revealed national unemployment rose 0.1 percentage point to a seasonally adjusted 4.6 per cent for the month of Septembers, with 111,000 fewer people employed.
Hours worked were also 2 per cent lower than levels experienced at the beginning of the pandemic in March 2020.
The participation rate dropped 0.7 percentage points to 64.5 per cent and it is the third consecutive month the economic measurement has fallen.
Head of labour statistics at the ABS, Bjorn Jarvis, said the unemployment rate being below 5 per cent reflected a large number of people have given up looking for work while lockdowns restrict activity.
According to the ABS, 60 per cent of the nation's workforce are based in New South Wales and Victoria.
"The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions," Mr Jarvis said.
"Beyond people losing their jobs, or working reduced or no hours, we continue to see how challenging it is for people without work to remain active within the labour market during lockdowns."
The ABS also noted NSW and the ACT have experienced their lowest participation rates since the beginning of the pandemic.
The ACT's participation rate stooped 1.9 percentage points over the month, while hours worked in the bush capital slumped 10.5 per cent over the month of September.
"In the Australian Capital Territory, hours worked fell by 10.5 per cent in September, compared with a 3.2 per cent fall in employment," Mr Jarvis said.
"This highlights the extent to which people had reduced hours or no work through the lockdown, without necessarily losing their jobs. It also shows that hours continue to provide the best indicator of the extent of labour market impacts from lockdowns."
Underemployment on a national level dropped 0.1 percentage point to 9.2 per cent.
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