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Australia employment slips in Sept, but data in doubt

Thursday, October 9, 2014 - 09:47
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Australian employment reportedly fell in September while the jobless rate ticked higher, but such were the doubts over the reliability of the figures that analysts and financial markets chose to discount the apparently soft outcome - PHOTO: BLOOMBERG

[SYDNEY] Australian employment reportedly fell in September while the jobless rate ticked higher, but such were the doubts over the reliability of the figures that analysts and financial markets chose to discount the apparently soft outcome.

The Australian Bureau of Statistics (ABS) estimated a net 29,700 jobs were lost in September, with all the fall in part-time work as full-time jobs rose 21,600. The unemployment rate ticked up to 6.1 per cent from a revised 6.0 per cent.

However, the ABS has had to restate all the figures since July because of problems with its seasonal adjustment process.

Instead, it is now reporting the raw, unadjusted series which makes it harder to judge the true state of the labour market.

August's record rise in employment of 121,000 was restated to show an increase of 32,100, while July's shock spike in unemployment to 6.4 per cent was also revised away and is now shown as 6.0 per cent. "I'm ignoring the employment numbers for a few months until we find out how exactly they're going to be measured," said David de Garis, a senior economist at National Australia Bank, echoing the frustration of many analysts. "Leading indicators of labour demand suggest that we're going to get some employment growth in the months ahead. Whether that will be sufficient to counter the growth in the workforce from the increase in the population remains to be seen." The uncertainty over the data limited the market reaction. The Australian dollar initially dipped a quarter of a US cent but soon recovered to be up on the day at US$0.8851.

Interbank futures were unmoved as investors have long priced out any chance of a move in interest rates by the Reserve Bank of Australia (RBA) for months to come.

The ABS said that while compiling the September data, it found that the normal seasonal pattern evident from July to September was not apparent, so it had decided to report the raw numbers instead.

It was a highly embarrassing admission from an agency that prides itself on its professionalism. The bureau has suffered stiff budget cuts in recent years and had to cut back on some data collection and streamline its surveys.

Treasurer Joe Hockey on Wednesday acknowledged the agency had insufficient resources to be able to upgrade its computer systems, but said he would not write a "blank cheque" to get things fixed.

Instead, he floated the idea of making users pay for some data. "That's one of the things we've been actively looking at and I'll be taking initiatives to cabinet in the next few weeks,"Hockey told reporters in Washington, where he is attending a meeting of the International Monetary Fund.

Many of the ABS's releases are closely tracked in financial markets and billions of dollars change hands depending on whether the results beat or miss forecasts.

With the employment numbers under a cloud, analysts have fallen back on other indicators of the labour market such as job ads and business surveys.

These suggest employment is growing moderately at perhaps 1.0 to 1.5 per cent a year, just enough to keep up with growth in the workforce but not enough to pull down the unemployment rate.

The RBA itself has said there might not be a sustained fall in unemployment until late next year or early 2016. That, in turn, is one reason markets are not pricing in much risk of a rise in rates until very late in 2015. - Reuters