About 3000 residents of the New England have lost work in just a month, according to the latest ABS data.
The June Labour Force statistics show the local economy contracted even, before the latest COVID-19 outbreak.
The region's employment to population ratio, which counts every person with a job, dropped from a year record high of 64 per cent in February, to just 56.7 per cent in June.
More women are employed than men, with 57.1 per cent of all women working and just 56.2 per cent of men in work. Tamworth's employment rate is well below the state average of 62.7 per cent.
Business NSW Regional Manager Joe Townsend said the region had shed about 3000 jobs since May.
"Unfortunately, we've seen a contraction in the labour market for the New England North West, with 3,000 fewer jobs than last month" Mr Townsend said.
"The region now has 2,400 fewer employed persons than the same time last year.
"Concerningly, these statistics were recorded during the first half of June, before Sydney was placed in lockdown and the subsequent flow-on effect to regional NSW."
Tamworth Business Chamber President Steph Cameron said, paradoxically, most businesses had numerous job openings they couldn't fill, particularly for employees with trade skills.
"All that's been reported to me is that we're unable to find skilled workers, that tradies are in short supply, and that employers are struggling to find skilled people" she said.
"The other thing it could be, if more people are moving into the regions that don't have work."
The first coronavirus lockdown battered the economy of Tamworth and the North West, sending thousands to the Centrelink lines.
Employment rates dipped to a low of just 54.8 per cent in May 2020, a rate which hasn't been seen since 2017.
But an enormous injection of cash through the Commonwealth JobKeeper and JobSeeker payments helped the local economy recover. Both payments were cut back in the early months of 2021.
Ms Cameron said it's possible the end of the payments may have contributed to a weak recovery.
"There's a lot of businesses out there in tourism, education and hospitality, that aren't coming from a strong base. A lot of organisations that are trying to stay afloat and then the second wave of COVID came along," she said.
"It's tough times for some businesses."
Mr Townsend said the latest state lockdown was likely to cause even more damage to the local economy, with preliminary retail sales figures suggesting that the state had a 2 per cent decrease in June alone.
"The lockdown over the past month will weigh heavily on the economy and employment over the coming three months, with the Prime Minister not expecting it to rebound until the December quarter," he said.
"While trading conditions are forcing many businesses to their knees, the government grants will certainly help businesses who have suffered significant downturn keep the lights on
"When restrictions ease and our vaccination rate improves, I am certain we will recover. Last year, when we faced similar conditions, our resilient community supported each other and employment rebounded."
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