ANOTHER interest-rate cut in December is at “odds on” after an influential report showed the number of people out of work surged.
The report, by Roy Morgan Research, found unemployment is now running at 8.6 per cent, up a whopping 0.9 per cent in October and suggesting more than one million Australians are out of work for the first time since 2002.
A further 848,000 people are also classified as “under-employed”, defined as part-time workers and consultants looking for more work.
The news emerges just 48 hours before the release of official unemployment data by the Australian Bureau of Statistics. If that also shows an increase, economists say it’s odds on the Reserve Bank will cut rates again next month.
“We’ve been hearing anecdotes about layoffs for some time but until now it hasn’t really shown up in the data,” Shane Oliver, chief economist at AMP Capital, said.
The huge increase in unemployment has been blamed in part on large numbers of people returning from rebuilding projects in the disaster-struck areas of Queensland.
According to the ABS, unemployment is just 5.2 per cent – far lower than the Roy Morgan data suggests – because of differences in the way the two organisations compile their statistics. But many economists say ABS data is flawed.
“The Roy Morgan data gives a more realistic view of the state of the labour force,” Bill Mitchell, professor of economics at the University of Newcastle, said. “The way the ABS frames its questions means that huge numbers of unemployed workers are simply not counted.”
Professor Mitchell said to get a more realistic sense of unemployment, you should “double” the ABS figure.