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Don’t open the champagne just yet

Today saw the release of what, at first glance, seem promising improvements in employment in Australia.

The headlines are saying that unemployment has dropped from 6.2% to 5.9%. Supposedly 58,600 jobs were created in October, 40,000 of them full time, with monthly hours worked increasing by 19.1 million hours.

Those are, of course, the seasonally adjusted estimates, which are subject to a great deal of volatility. Trend estimates are considered the best indicators of the underlying behaviour in the labour market.

If we refer to the trend estimates we get a slightly different story which shows the unemployment rate remaining steady at 6.1% with 18,800 jobs created and monthly hours worked increasing by 5.7 million hours.

Since October 2014, trend employment has increased by 260,500 persons, while the civilian population aged 15 years and over grew by 288,200 persons over the same period, so job growth has fallen short of population growth by some 27,700.

The Labour Force Survey is based on a sample of about 26,000 dwellings and covers approximately 0.32% of the civilian population of Australia aged 15 years and over. Extrapolating from these figures is therefore subject to sampling variability.

The ABS acknowledges this and publishes, under the heading sampling error, a 95% confidence interval ie there is a 95% chance that the true value of the estimate lies within that interval. These figures highlight just how wrong the headline figures could be.

We can be 95% sure that employment went up by somewhere between 400 and 116,800 in October. That’s a hell of a range, 58,600 +/- 58,200, and there’s a 5% chance that the real figure lies outside even that very large spread.

Likewise for the number of unemployed people. We can be 95% sure that it ranged anywhere from decreasing by 71,600 during that month to increasing by 4,800: 33,400 +/- 38,200. The unemployment rate could be anywhere between 5.5% and 6.3%.

So when you see Scott Morrison and Michaelia Cash preening at the various press conferences today, keep in mind that these figures are likely statistical noise with trend figures presenting a different picture. I hope the trend will eventually bear out these improvements but I certainly wouldn’t put money on it.

 

16 comments

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  1. Give up

    What of all the thousands that were lost. If you believe this crap you would believe anything.

  2. gangey1959

    Yay. The hours worked went up.
    Well stuff me.
    Of course they did. It’s Fruit Picking Season. Again. For some strange reason it happens about this time every year. The tourists love it. All that luvverly tax free cash in hand money.
    If overall that has made the slightest dent in Australia’s unemployment figures, let alone minus 0.3%, then my application to be one of Santa’s helpers this year is on track, and I’ll be outta here in a week or so. Methinks I’d best not hold my breath for long.

  3. Kaye Lee

    Just to highlight how you can choose which figures to quote, both Morrison and Cash have said today that there have been 315,000 jobs created in the last year. This comes from the “rebenchmarked” seasonally adjusted figures. (Can you feel my headache?) If you refer to the more appropriate trend figures, there were 260,500 more people employed. As you can see, it makes a big difference.

  4. mars08

    There are plenty of jobs for those who really want to work…

  5. paul walter

    mars, for once I disagree. Worse still, I laugh.

    Wait a mo..you are doing satire on the tory jobsnob unworthy dole bludgers mantra..(phew).

  6. Kaye Lee

    That very much depends where you live mars08. My son, after completing his qualification, applied for a kazillion jobs but, as he had no work experience, he was unsuccessful so he put his name down at an agency and got contract work which entailed him travelling two hours each way to work with no holiday or sick leave and no job security. This was with a government department. Everyone who worked there was on contract (costing the government a shit load more than if they were permanent employees, much of which went to the agency). A woman who had worked there for over ten years had to take a few weeks off to look after her elderly mother who was very ill. They sacked her on the spot – don’t come back.

    Or are you being sarcastic?

  7. JohnI

    In response to the Labour Force Survey ScoMo said: “I congratulate the businesses that employed the 58,600 people who got jobs in October and the people who took on those jobs”.

    So, we can add statistics and sample surveys to the lengthening list of things about which our newly-minted Treasurer knows very little. Sort of reinforces my perception of him as being a self-confident dill.

  8. mars08

    /sarcasm

  9. Kaye Lee

    I figured as much but I thought my son’s story worth telling anyway. It makes me want to slap those smug bastards when they say just go get a job. They seem to have no idea how difficult it is and this is for a kid who has tried so hard.

  10. Kaye Lee

    Peter Martin gives further explanation in this article.

    “ABS labour force figures can’t be believed – employment didn’t jump by 58,600 jobs in October.”

    http://www.smh.com.au/business/the-economy/abs-labour-force-figures-cant-be-believed–employment-didnt-jump-by-58600-jobs-in-october-20151112-gkx9rx.html#ixzz3rGk0vijm

    And this one from the AFR last month also causes doubt.

    “Former ABS head says employment data ‘not worth paper they’re written on’.”

    http://www.afr.com/news/economy/former-abs-head-says-employment-data-not-worth-paper-theyre-written-on-20151014-gk8syh?#ixzz3rGjoblcn

  11. Terry

    but u need a high unemployment figure to justify dropping wages , cutting conditions and knock down union influence ..its called control ..nothing better then too control your work force if theirs hundreds that will do your job for half the wage …maybe a bowl of rice and a bed ..does not make for a great society , but the profit is good ..that’s the thing about pure greed…bugger having a conscience , wont get u far in the world of money. check out what big hearted people[ bhp] just did , that’s just mine blowing but its ok ..nothing to see here , were all moving to mars anyway

  12. Rossleigh

    Gee, be fair – the unemployment rate hasn’t been this low since August 2013!
    Turnbull has nearly got it back the figure it was under Labor…
    In just one month, he’s a demigod.

    (Post this on Liberal sites and watch the fireworks that follow. It’ll be almost like Guy Fawkes all over again)

  13. JohnB

    Kaye Lee,
    I sympathise with your son’s demoralising predicament.
    I am really not sure I could have survived such employment uncertainty when I entered the workforce (be it 50 years ago).
    Employment opportunities are indeed few and far between for teenage jobseekers.

    Today’s blog from Bill Mitchell sets out some disturbing long term figures and trends effecting the upcoming generation of workers:

    Australian labour market – improvement but hardly credible


    “…The teenage labour market remains in a parlous state although it improved this month.
    This is an emergency which is being ignored by the Federal Government. The neglect of our teenagers will have a very long memory indeed and the negative consequences will be stronger given the ageing population….”

    It is problem that is in urgent need of some positive action – closing Tafes and eliminating apprenticeships is setting us, (and a generation) up for a big fail.

    On another subject you might like to have a bit of fun with this:
    http://www.warrentruss.com/LNCGA/BackingHardworkingAustralians_Web.pdf

  14. Kaye Lee

    JohnB,

    I looked at that propaganda sheet by Warren Truss. How unfortunate for him that his glossy brochure features our ex-PM. One wonders how much it cost us to produce. As to the content, when I get the time I look forward to setting Warren straight on a few things. I am so sick of the lies.

  15. Möbius Ecko

    Kaye Lee @ 8:38 pm

    Whilst we had the NSW employment minister gloating in State parliament yesterday about how her State is leading every other State in jobs growth in light of the latest figures, Victoria was claiming it was leading national jobs growth.

    Someone on ABC radio pointed out that for the Victorian (Labor State) figures to be believed would mean an incredible rate of jobs growth in a very short time.

    This also leads to a point I’ve raised in the old Dunlop blog. Why does the Federal government claim the jobs figures (of course only if good) when it’s actually a State by State amalgamated figure, meaning the Federal government has little to do with the outcome apart from hiring and sacking public servants, and the individual States nearly everything to do with it?

  16. Kaye Lee

    Peter Martin’s point about the survey sampling is an important one. Each month, one eighth of responding households are moved out of the survey and a new eighth brought in. If the group leaving or entering the survey are slightly skewed towards being employed or unemployed, when we extrapolate the figures multiplying them by over 300 that skew can have a huge effect. Monthly seasonally adjusted figures will contain aberrations which is why trend figures will be closer to the mark. Just to keep up with population growth we need about 24,000 new jobs per month.

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