Australia’s recent floods have had a massive impact on the country’s unemployment data, so much so it could cause the need for a massive jobs data correction down the line, according to Glenn Maguire and Joseph Lau of Societe Generale.What’s happened is that the Australian government can’t even get to the people who’ve had their homes and businesses flooded to ask whether they have jobs or not. So the government just used the data they had and inflated the value of those answers it actually got.
The result: 20,000 jobs lost among full-time male Queensland residents, which doesn’t make much sense considering how strong the Australian economy is (it still beat job growth expectations for Janaury). Desperate to get the monthly data out, Australia may be misrepresenting weakness in its economy, all due to weather conditions.
For Australia, this matters a lot. As the country approaches NAIRU (non-accelerating inflation rate of unemployment), the Reserve Bank of Australia may need to raise rates in order to keep inflation in check. If it dithers because it thinks the unemployment situation is worse than it really is, that could make the rate hike bigger in the long run.