THE reporting of the November employment and unemployment figures on December 8 raises a question as to the capacity of the usual commentators to give the community an indication of the underlying picture.
Just about every analyst agreed that the monthly increase of 112,000 or 1.4 per cent in the seasonally adjusted figure for employment was "unbelievable" and that the December figure will almost certainly reverse most, if not all, of this increase.
Yet this "unbelievable" November increase was described as being "good news" for the Government and as making it most unlikely that the December quarter GDP figure will show a fall. When the December quarter seasonally adjusted employment figures record a large fall, will this also be "good news" because the seasonally adjusted figures are "volatile" and "too much attention should not be paid to month-to-month variations"?
As far as I can see, not one commentator on the November figures even mentioned that the trend figure for unemployment increased to 8.6 per cent (from 8.5 per cent) or that the trend figure for employment increased by only 8,000 or 0.1 per cent.
In the five months since June, the trend rate of unemployment has risen from 8.3 per cent and trend employment has increased by only 33,000 or by 0.4 per cent. At this rate, employment growth during 1995-96 will be less than 1 per cent and unemployment in the June quarter of 1996 will be around 9 per cent, compared with Government forecasts for 2.75 per cent employment growth and an unemployment rate of 8.0 per cent. Some "good news"!
The ABS publication containing the employment and unemployment figures points out that seasonal adjustment does not remove irregular or non-seasonal influences which may occur in a month and that the seasonally adjusted figures "may not be reliable indicators of trend behaviour". In fact, the ABS states that irregular factors unrelated to the trend, account for more than half the changes in employment and 70 per cent of the changes in the unemployment rate.
Surely, then, the trend figures deserve at least a mention? Indeed, a mere glance at the ABS graphs comparing movements in the seasonally adjusted and trend figures suggests that the trend figures give the best underlying picture.
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