Unemployment and under-employment have battered Australian households with more than half saying they’ve been unable to save, a survey has found.
Households battling to save any cash shot up from two per cent to 51 per cent in the six months to December 2013, according to ME Bank’s biannual Household Financial Comfort Report.
Single parents suffered the most anxiety, while retirees and couples with children reported the highest level of comfort when it came to savings.
The study of 1500 households also found nearly half have less than $5,000 in savings for an emergency, while 11 per cent are spending more than they earn.
A further five per cent are using equity in their own home to make ends meet month to month.
And that’s assuming they had a job in the first place.
Job insecurity rated as one of the biggest concerns with nearly one-third of households not feeling safe in their employment.
In June, only 26 per cent of respondents harboured this worry.
If they were to hypothetically lose their job, apprehension about finding a new one within two months rose one per cent to 55 per cent.
ME Bank CEO Jamie McPhee said the rise in job insecurity is a result of increasing unemployment coinciding with a surge in casual and part-time roles.
“That’s exacerbated by a relatively low level of household comfort with emergency cash buffers,” he said.
“And more generally, current savings and investments.”
Unemployment remained steady at 5.8 per cent in December, but Australia suffered its worst year for jobs growth in 17 years, sparking talk of an interest rate cut.
While 31,600 full-time jobs were lost last month, 9000 part-time jobs were added to the economy.
When the RBA meets on Tuesday it is widely expected to keep interest rates on hold, a move McPhee said the findings support.
Overall, financial comfort levels were largely unchanged in the past six months, with households scoring their welfare at 5.52 out of 10.
However, that figure still marked the highest level since the index was established in October 2011.
The Household Financial Comfort Report is the result of an online survey of approximately 1,500 Australians aged 18 years and older.
ME Bank commissioned DBM Consultants to develop the Household Financial Comfort Index with Economics & Beyond and Baker Group in 2011.
In a separate report released today manufacturing activity contracted for the third month in a row.
The Australian Industry Group’s Performance of Manufacturing Index fell 0.9 points to 46.7 in January, seasonally adjusted – below the 50 level that separates expansion from contraction.
It was the third consecutive month of contraction, Ai Group chief executive Innes Willox said.
“2014 looks to be another challenging year for many Australian manufacturers, although a handful of areas are showing some positive signs of growth,” he said.
“Comments from manufacturers indicate that a lower Australian dollar has started to benefit some manufacturing businesses but exports remain fragile.”
Growth was recorded by four sub-sectors: food, drinks and tobacco; wood and paper products; petrol, coal, chemicals and rubber; and non-metallic mineral products, which includes building materials like glass, bricks and cement, and has grown in response to the lift in residential construction.
“But our other large manufacturing sectors continue to struggle, despite the lower dollar and low interest rates,” Willox said.
“Muted local demand and a difficult export market means they are in no position to assume the lead in generating alternative sources of growth as the mining investment boom fades through 2014.”
