We know the RBA is hell bent on lower unemployment, lifting wages and boosting inflation
But it seems they’re not really getting anywhere despite the three rate cuts this year
And maybe they’re working with the wrong stats
According to Roy Morgan research…
In October nearly 1.1 million Australians were unemployed (7.8% of the workforce) with an additional 1.2 million (8.9% of the workforce) now under-employed.
The workforce, which comprises employed Australians and those who are unemployed and looking for work, has increased year-on-year by 330,000 to 13,789,000. This increase was driven entirely by an increase in full-time employment, as unemployment and part-time employment fell;
The number of Australians in employment was up 520,000 to 12,714,000 in October 2019 – a rise driven by a significant increase in full-time employment of 695,000 to 8,582,000. Over the past year part-time employment has declined by 175,000 to 4,132,000;
Unemployment, the number of Australians looking for work, was down 190,000 on a year ago, to 1,075,000 Australians, and the unemployment rate was down by 1.6% to 7.8%. Under-employment, Australians working part-time and looking for more work, is little changed from a year ago at 1,232,000 (down 10,000) and is now 8.9% of the workforce, a drop of 0.3% points on a year ago;
Roy Morgan’s unemployment figure of 7.8% for October is higher than the current ABS estimate for September 2019 of 5.2%, although the gap between the two measures is the closest it has been in four years, since September 2015. Roy Morgan’s under-employment estimate of 8.9% is now slightly above the current ABS under-employment estimate of 8.3%;
Roy Morgan’s total unemployment and under-employment of 2,307,000 Australians (16.7% of the workforce) in October, down 200,000 on a year ago, is larger than figures usually proffered, but the biennial ABS survey the ‘Barriers and Incentives to Labour Force Participation’, last released in 2017, claimed the much higher figure of 2.7 million Australians would like a job or to work more hours – including 1.1 million people who wanted a job but were excluded from the Labour Force.
Michele Levine, CEO Roy Morgan, says full-time jobs growth has been strong over the past year resulting in a decline in unemployment – but under-employment remains a huge issue:
“Roy Morgan’s latest data shows employment growth in the Australian economy has remained strong throughout 2019 with employment up by over 500,000 compared to October 2018. The growth in employment has driven both full-time and overall employment to new record highs.
“However these trends serve to highlight an increasing issue for Australians, which is under-employment. Roy Morgan estimates over 1.23 million Australians are under-employed in October – 8.9% of the workforce. Combined with 1.08 million unemployed (7.8% of the workforce), this means a total of 2.3 million Australians (16.7%) are either unemployed or under-employed.
“Of particular concern for the one-in-six Australians now looking for a job, or looking for more hours, is that the boost to Business Confidence seen after the L-NP’s victory at the Federal Election in May has now ended. The leading indicator dropped to 106.0 in October, its lowest result since April.
“The RBA’s decision to cut interest rates in half by a total of 0.75% over the last few months has stabilised Australian housing markets, however more action will be required to provide a renewed boost to Business Confidence and the broader Australian economy.
“The best way to reduce the high level of labour under-utilisation, now stuck at over 2 million for over four years, is to provide a healthy and strong economy that encourages businesses to invest in growing their human capital by hiring new workers.”
Clearly this means we’ll have low interest rates for a long, long time. And maybe even QE
Read more: propertyupdate.com.au