ABS abandons seasonal adjustment for latest jobs data

By business reporter Michael Janda


The Australian Bureau of Statistics is taking the rare step of abandoning seasonal adjustment for its latest employment data.

The ABS uses seasonal adjustment, based on historical experience, to account for the normal variation between hiring and firing patterns between different months.

However, after a winter where the seasonally adjusted unemployment rate swung wildly from 6.1 to 6.4 and back to 6.1 per cent, the bureau released a statement saying it will not adjust the original figure for September for seasonal factors.

It will also reset the seasonal adjustment for July and August to one, meaning that these months will also reflect the original figures.

Excluding any other revisions, that change will take July's previously reported unemployment rate of 6.4 per cent back to 6 per cent, and August's 6.1 per cent jobless rate also down to 6.

Participation - the proportion of those aged over 15 in work or looking for it - will also have remained steady over winter at 64.7 per cent, rather than jumping between 64.8 and 65.2 per cent.

The biggest change will be to August's outsized jobs growth of 121,000, which will be revised back down to a more typical, but still strong, 32,100.

Market economists, and even the Reserve Bank, have been expressing doubts about the reliability of figures that showed huge job losses and gains over the past couple of months.

July's figures showed a jump in unemployment to a 12-year high of 6.4 per cent, despite an estimate of just 300 jobs being shed, while August reversed that rise with a record 121,000 jobs estimated to have been added.

The ABS says the seasonal pattern usually evident in July, August and September was not apparent this year.


Unemployment data explained

ABC business reporter Michael Janda explains how the jobs data are calculated and what to look for in the figures.


It is commissioning a review, with external input, to developing an appropriate method for seasonal adjustment in October's data and beyond.

"It is critical that the ABS produces the best set of estimates that it can so that discussion is on what the estimates mean, and not the estimates themselves," said acting Australian Statistician Jonathan Palmer in a statement.

The ABS has effectively repeated the old economist adage that "the trend is your friend", saying it will continue producing its trend estimates and encourages users to focus on this more stable data.

That is certainly what many market analysts will be doing, with RBC Capital Markets economist Michael Turner saying the unadjusted figures are also unreliable.

"In terms of gauging the health of the labour market, using unadjusted data is not ideal given there is still likely some seasonality present, just that the ABS is not sure how much," he wrote in a note on the announcement.

No.

Well whoever it is, they seem to have attributed the same kind of accuracy to seasonal fluctuations in employment as the supposed climate gurus have to history.
Are you sure they haven't snuck a few of the redundant ones in there? Maybe Tim Flannery?

Now there's a bloke we could rely on for our economic forecasts.

bogarde73 wrote on Oct 9^th, 2014 at 9:41am:

Well whoever it is, they seem to have attributed the same kind of accuracy to seasonal fluctuations in employment as the supposed climate gurus have to history. Are you sure they haven't snuck a few of the redundant ones in there? Maybe Tim Flannery? Now there's a bloke we could rely on for our economic forecasts.

Is this a jobs related post or climate change post?

Too much cutting of funds and staff numbers means the ABS surveys are not large enough so fluctuate and have a higher margin of error.

We need to fund the CSIRO, BuMet, ABS and the ABC properly. This govt is definitely anti–science so I expect defunding will continue.

I notice Blowhard joe blaming labor for this , he even mentioned ABS dont have a chief statistician.

I hadnt realised it took more than twelve months to fix staffing levels and hire one chief statistician.

But the adults are in charge!

The pseudo part of current climate scientists is being put in to practise

Prime Minister for Canyons wrote on Oct 9^th, 2014 at 9:46am:

bogarde73 wrote on Oct 9th, 2014 at 9:41am: Well whoever it is, they seem to have attributed the same kind of accuracy to seasonal fluctuations in employment as the supposed climate gurus have to history. Are you sure they haven't snuck a few of the redundant ones in there? Maybe Tim Flannery? Now there's a bloke we could rely on for our economic forecasts. Is this a jobs related post or climate change post?

It's a work in progress.

"will take July's previously reported unemployment rate of 6.4 per cent back to 6 per cent, and August's 6.1 per cent jobless rate also down to 6. "

Wow – ONLY 6%.  What about the under-employed?  No guernsey?

"the proportion of those aged over 15 in work or looking for it - will also have remained steady over winter at 64.7 per cent, rather than jumping between 64.8 and 65.2 per cent."

Now that IS exciting news – ONLY 35.3% are not in work!  Of course that includes all your 'leaners' like those pesky pensioners and such.....


"jobs growth of 121,000, which will be revised back down to a more typical, but still strong, 32,100."

Of course!  Why couldn't I see that?  32,100 instead of 121,000 – or a real figure of about one quarter... any breakdown on how many of those are real jobs and how many are MacJobs?  Might strong stuff there!


"The ABS says the seasonal pattern usually evident in July, August and September was not apparent this year."

Sounds like the employment market is going belly-up to me..... oh, well...... send in some more frackers to rape the country, employ fifty people for six weeks to get a 'project' up and running, inflate the costs of housing etc in rural towns, and then vanish into the smoke of rising burnt gas and rising gas prices.  That'll help.  More MacJobs!

Joblessness rises in September
AAP
AAP – 10 minutes ago
The unemployment rate rose in September, but economists are taking the figures with a grain of salt after the Australian Bureau of Statistics admitted there were problems with its recent data.

Australia's unemployment rate rose to 6.1 per cent in September, from 6.0 per cent in August, the ABS said on Thursday.

The total number of people with jobs fell 29,700 to 11.593 million.

The ABS on Wednesday admitted there were problems with its July and August jobs figures, which showed a shock jump in unemployment in July, followed by an unbelievable record number of jobs being added to the economy in August.

The ABS said it would replace seasonally adjusted labour force estimates already published for July and August with unadjusted figures, and that the unadjusted and seasonally adjusted figures for September would be the same.

Full-time employment rose 21,600 to 8.029 million in September, seasonally adjusted, and part-time employment was down 51,300 to 3.564 million.

The participation rate - those that have a job, are looking for work or are ready to start work - fell to 64.5 per cent, from 64.7 per cent in August.

National Australia Bank senior economist David de Garis said economists had little faith in the ABS numbers and were instead looking to other surveys and indicators to get an idea of how the labour market was tracking.

"I'm just trying to close my eyes to them a little bit for a few months until we get over this situation and see what the ABS comes up with as an alternative way of measuring unemployment on a month by month basis," Mr de Garis said.

JP Morgan economist Tom Kennedy said it was not a good sign that the unemployment rate rose and the total employment dropped.

"That basically offsets the employment gain that we saw in August, but the figures are probably a little bit softer given the rise in the unemployment rate," he said.

Mr Kennedy expects the unemployment rate will peak at 6.2 per cent or 6.3 per cent, late this year or in the first three months of 2015.

"From there you're going to see a very gradual decline in the unemployment rate down into the fives," he said.

"We still see the labour market remaining quite soft with wages pressures remaining again remaining pretty soft."

+++++++++++++++++++++++++++++++

He's nobody's fool that JPM bloke. A pithy statement worthy of Joe Hockey.

Redmond Neck wrote on Oct 9^th, 2014 at 10:06am:

I notice Blowhard joe blaming labor for this , he even mentioned ABS dont have a chief statistician. I hadnt realised it took more than twelve months to fix staffing levels and hire one chief statistician. But the adults are in charge!

Yes - he blamed Labor for not upgrading the ABS computer systems.... you mean they were broken?  You mean the old systems didn't work?  Does this mean the figures have always been wrong?

The mind boggles.... I used to do phone surveys for the ABS and I compiled my data by hand....... it is simply not that hard.

I used to do an overtime survey.... and an industrial disputes one.... multi-skilled....

Maybe I'm wrong, but wouldn't seasonal jobs have a fair impact on job figures, eg banana pickers and other fruits are only employed at certain times.

That's what seasonal adjustment is for, to smooth out the figures and make the trend clearer.
You've got to pursue one line of statistics or the other, ie raw data or seasonally adjusted. A mish-mash of both is misleading.

Grappler Deep State Feller wrote on Oct 9^th, 2014 at 10:11pm:

The mind boggles.... I used to do phone surveys for the ABS and I compiled my data by hand....... it is simply not that hard. I used to do an overtime survey.... and an industrial disputes one.... multi-skilled....

Sydney? I used to do owner builder stats.

The climatescientists are doing a fine job.

http://tiny.cc/dfmhnx

Ex Dame Pansi wrote on Oct 10^th, 2014 at 8:58am:

Grappler Deep State Feller wrote on Oct 9th, 2014 at 10:11pm: The mind boggles.... I used to do phone surveys for the ABS and I compiled my data by hand....... it is simply not that hard. I used to do an overtime survey.... and an industrial disputes one.... multi-skilled.... Sydney? I used to do owner builder stats.

Yes - The Big Smoke... I was the radical activist who challenged the management style and approach, and resigned to go to private industry where I was earning the same as the Sydney head within 2 years.....

I'm now an owner builder - or rather a builder owner.

Grappler Deep State Feller wrote on Oct 10^th, 2014 at 11:08am:

Ex Dame Pansi wrote on Oct 10th, 2014 at 8:58am: Grappler Deep State Feller wrote on Oct 9th, 2014 at 10:11pm: The mind boggles.... I used to do phone surveys for the ABS and I compiled my data by hand....... it is simply not that hard. I used to do an overtime survey.... and an industrial disputes one.... multi-skilled.... Sydney? I used to do owner builder stats. Yes - The Big Smoke... I was the radical activist who challenged the management style and approach, and resigned to go to private industry where I was earning the same as the Sydney head within 2 years..... I'm now an owner builder - or rather a builder owner.

after all the things you have claimed to be... and expert in them all of course... I don't believe you.