Economists slam ABS over wild jobs figures
The Australian
September 12, 2014
THE Australian Bureau of Statistics has come under fire after reporting the biggest monthly jump in employment in the 35 years of official records, with market economists slamming the figures as “unbelievable.”
The August monthly labour force survey showed 121,000 jobs were created in four weeks, more than the economy had generated in the previous 12 months and almost 10 times more than the market was expecting. Almost 90 per cent of the new jobs were part-time.
Citigroup’s two chief economists, Josh Williamson and Paul Brennan, said: “We don’t believe the data.”
They added that “even the ABS probably doesn’t believe it”.
The ABS stood by its report. Acting chief statistician Peter Harper said the bureau had thoroughly investigated the survey and not found any evidence of problems.
“The August numbers were compiled in accordance with our high professional standards,” Mr Harper said. “There were no methodological changes made in August that would explain the significant increase in part-time employment.”
The upbeat survey brought the jobless rate down from 6.4 per cent to 6.1 per cent. It reversed the jump in unemployment recorded in July, which had been the biggest one-month increase since 2002 and was similarly greeted with scepticism.
Even the government was cautious about claiming too much credit for the August report. Employment Minister Eric Abetz said: “Today’s figures are encouraging, but the volatility in the numbers show the labour market is soft and employers still have concerns about taking on new employees.”
Market economists pointed to changes in the questionnaire used in the survey, which were introduced in July. Among them was the introduction of a question asking whether people were starting a small business, and this might be skewing the survey.
The ABS said the changes in the survey in July could not explain the moves in August.
Citigroup said it was unlikely an economy growing below trend with very slow wages growth would suddenly report the biggest ever increase in unemployment.
The survey showed the number participating in the labour force had registered the biggest one-month increase in 12 years.
Unemployment rates fell in all states, South Australia registering a huge fall from 7.2 per cent to 5.9 per cent. Tasmania’s rate fell from 7.6 per cent to 7.1 per cent while the decline in other states was between 0.1 per cent and 0.3 percentage points.
JP Morgan senior economist Ben Jarman said the unreliability of the jobs data would enable the Reserve Bank to keep rates steady, even if the economy was deteriorating.
“Given the governor’s reluctance to ease policy again, he now has even more scope to slip behind a veil of uncertainty regarding the degree of slack in the economy and keep policy on hold,” Mr Jarman said. He said the RBA would have to rely on other economic data to guide its action. The central bank expects unemployment to remain around current levels until 2016.
Other economists noted that, while the level of employment apparently leapt, the number of hours worked fell and the level of “under-employment” — those who don’t have a job or are working fewer hours than they would like — jumped to a 16 year high of 14.6 per cent. The dollar jumped from US91.6c to US92.2c following the jobs data release, but fell back to US91.8c as analysts questioned their reliability.
Economists believed the unemployment figure in August of 6.1 per cent was probably “about right”. ANZ economists Savita Singh and Riki Polygenis said there had been other indicators the labour market was at least stabilising and possibly improving.
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