Australians have been fed a ‘statistical furphy’
ABS bungles put jobless rate in doubt
The unemployment rate hit 6.1% in September but ABS bungles put that in doubt explains Economics reporter Gareth Hutchens.
Economists say Australians have been fed a “statistical furphy” about the unemployment rate because it has been better than we have been led to believe.
The Bureau of Statistics will issue a heavily revised set of employment data on Thursday that could show the unemployment rate has been lower than its official figures suggest in recent months.
It will be good news for the Abbott government, and Treasurer Joe Hockey in particular.
Analysts had been sceptical of the record surge in jobs reported by the ABS for August. Photo: Rodger Cummins
But it is an embarrassing back-track for the bureau.
The ABS issued a press release on Wednesday admitting it will have to revise its July and August unemployment figures because there appears to be little evidence of “seasonality” in those months.
The ABS had previously reported the unemployment rate hit a 12-year high of 6.4 per cent in July before falling again to 6.1 per cent August. But economists say it may have been 6 per cent all along.
The Reserve Bank mentioned the problem in its monthly monetary policy statement this week, saying: “Labour market data have been unusually volatile of late.”
The news comes after the International Monetary Fund published its latest World Economic Outlook showing Australia’s unemployment rate is likely to be the second highest in the Asia-Pacific region over the next two years, behind the Philippines.
The IMF is predicting an unemployment rate of 6.2 per cent this year and 6.1 per cent next year. Only the Philippines is higher in the region, at 6.9 and 6.8 per cent.
However, the IMF relied on ABS data for those estimates so the IMF’s data may also have to be revised.
HSBC Australia chief economist Paul Bloxham says the official ABS unemployment data have been out of step with other labour market indicators for a while because broader labour market indicators have been positive in recent months, whereas the ABS data has been negative.
“The one that has looked out of line has been the official numbers,” Mr Bloxham said.
“On Thursday we may see a reconciliation of those official numbers with the other metrics of the labour market.
“That’s going to be the story … because if they make these revisions then a lot of what we’ve been talking about over the last couple of months may turn out to be a statistical furphy.”
On Wednesday, ABS acting Australian Statistician Jonathan Palmer justified the ABS’s decision to adjust its unemployment estimates for the past few months by saying it was “critical” for the bureau to produce the best set of unemployment estimates it could.
“To assist in this, the ABS will commission a review with independent external input to develop an appropriate method for seasonally adjusting October 2014 and following months’ estimates,” Mr Palmer said.
The news comes after the ABS endures the loss of more than 100 staff, the result of repeated cuts by the former Labor government in the guise of efficiency dividends.
Annette Beacher, head of research at TD Securities, said economists had been expecting the economy to lose about 30,000 jobs last month but after accounting for the ABS’s adjustment they are now expecting the number of employed people to increase by between 15,000 and 50,000.
ABS unemployment figures for September will be released on Thursday.