The Australian Bureau of Statistics decision not to apply a seasonal factor to this months employment report has done little to clarify the status of employment in Australia.
After the ABS said yesterday it would set the seasonal factor at 1 (meaning the raw data would be presented as the seasonally adjusted data) the major banks all upgraded their forecasts from small rises or negative outcomes to strongly positive numbers.
The data presented shows a fall of 29,700 jobs during the month of September and an increase in the rate of unemployment to 6.1%.
In trying to explain its move the ABS said:
The ABS has been unable to determine a definitive cause of this change in seasonality. It could have resulted from one or more factors including changes in “real world” labour market behaviour, changes in the timing and content of the supplementary survey program (run in conjunction with the Labour Force Survey), the introduction of web-forms, the introduction of the new labour force questionnaire, or refinements to collection procedures.
Given the sudden shift away from the usual seasonal patterns, the ABS has determined that the usual seasonal adjustment process, based on patterns in previous years, is not appropriate for application for the most recent months’ estimates.
Which means that when we mix seasonally adjusted numbers to June 2014 with non-seasonally adjusted numbers since then it is almost impossible to get any clarity using this series.
So lets look at the trend series which gives us a mixed picture of the employment market but one consistent with the economic outlook and other series of the labour market.
What we see is an employment market where the number of Australians employed, in trend terms, is at its highest level ever at 11.6 million yet unemployment has sat at 6% for three months and hours worked, in trend terms, are flattening out.
So for all the volatility in the headline number and the mess the ABS has made of the seasonal number that the market watches, and on which millions of dollars are made and lost, the message that the trend series has been giving for some time now is the key one to takeaway.
The Australian employment market is doing okay, could be doing better, but looks like it is still in relatively good health.