Doubt the record breaking jobs figures? So does the ABS By business reporter Michael Janda Thu 11 Sep 2014, 4:41pm Doubt the record breaking jobs figures? So does the ABS. Youve no doubt seen reports that 121,000 jobs were created in August. Thats the Bureau of Statistics best guess anyway. No doubt its a very educated guess - the bureau interviews around 60,000 people a month to ensure thats the case - but its still a statistical estimate based on that survey. What you may not have seen in most reports is that the ABS is only 95 per cent sure that the actual number of jobs created in Australia last month was somewhere between 63,400 and 178,600. Thats right, the magical number of 121,000 is just the midpoint of a range of estimates the bureau constructs from its survey, and seasonally adjusts based on historical experience. The revered unemployment rate is no different - the ABS says theres a 95 per cent likelihood its somewhere between 5.7 and 6.5 per cent. Once you comprehend this, its not so surprising that the unemployment rate can surge from 6 to 6.4 per cent one month, then plunge back to 6.1 per cent the next. The reality may be that it never actually went up or down at all, but the survey sample changed, or the people in the survey in those months dont reflect the general population very well. The trend is your friend So why bother looking at the figures at all? I hear many ask. They may not be perfect, but they are still the nations best guess at how many people are in work, out of work, looking for work or not engaged with the labour market at all. The issues with seasonal adjustment - which played a significant role in why the jobs gain in the traditionally weak employment month of August was so very large, record breaking in fact - explain why the ABS publishes a trend figure, and why commentators and their audiences should pay more attention to it. Unemployment data explained ABC business reporter Michael Janda explains how the jobs data are calculated and what to look for in the figures. The trend figure smoothes out these monthly jumps to give a more balanced picture of which direction employment is heading in. Since August last year that trend unemployment rate has slowly crept up from 5.7 to 6.2 per cent and, even when the seasonally adjusted rate has fallen, the more stable trend hasnt followed. Most economists think that trend reflects the true state of the labour market - some new jobs being created, but not quite enough to soak up Australias strong population growth. So dont be too shocked about the monthly movements in headline unemployment - thats all they are, just a good headline for us economic journos who struggle to find something that will peak the interest of potential readers in what can be very dry subject matter. Make sure you read the details of the article and find out what the trend is doing, and what other indicators and analysts are saying. And if the journalist or commentator youre reading doesnt mention the trends at all, then it may be time to find another who does. abc.net.au/news/2014-09-11/abs-casts-wide-range-on-unemployment-estimates/5737646
Posted on: Thu, 11 Sep 2014 12:30:00 +0000
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