Thursday, September 11, 2014

The trend is your friend

There is certain to be some confusion again around reporting of the latest unemployment data for August. A seasonally adjusted increase of 121,000 in employment has attracted most attention. The bulk of this was part-time employment and the ABS has indicated that this months sample rotation played a part and contributed 47,000 to part-time employment. This sounds like a very big number just from sample rotation!

Some commentary:

Conus: Aussie jobs surprise; Macrobusiness: Employment goes beserk!, Job numbers greeted with universal scepticism; David Scutt: Lies, Damned Lies and Australia's August LFS

There is also a good graph tweeted by Greg Jericho nicely demonstrating the difference between the volatile monthly seasonal employment data and the trend. The state data is also typically more volatile than the national data with the seasonally adjusted unemployment rate in SA this month falling unrealistically down from 7.2% to 5.9%. The only reasonable approach currently is to bypass the seasonal data and stick with trend as suggested by David Scutt:
Thankfully, helping to save some face at least, the less-volatile-yet-often-overlooked trend series reported that unemployment ticked up to 6.2% from 6.1%, participation to 65.0% from 64.9% while net employment increased by 18.7k to 11.619m. Clearly, if not already the case, the trend figures, rather than the seasonally-adjusted squark, should be the ONLY figures to watch in this release moving forward.
The regional data is out next week but given this volatility and following some changes to the survey methodology introduced last month I think just a cautious watch may be prudent for now.

There is also a twitter commentary roundup from Business Insider: Here Are The Best Reactions To Australia's Wacky Employment Data Today

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