The Australian Bureau of Statistics (ABS)has just confirmed that the recent run of employment releases were in fact rogue numbers as a result of incorrect seasonal adjustment factors.
In an announcement today the ABS said:
The ABS has concluded that the seasonal pattern previously evident for the July, August and September labour force estimates is not apparent in 2014. This assessment was made while preparing labour force estimates for September 2014 and relates to all seasonally adjusted labour force estimates other than the aggregate monthly hours worked series.
The impact of this is that the ABS has set “the seasonal factors will be set to one (reflecting no seasonality).”
This is a huge move and means that the data we receive tomorrow for labour force and unemployment will be the actual change in employment unadjusted.
The impact is that the data for the last month falls from a rise of 126,890 to a rise of just 32,145. Still healthy but painting a very different picture of the economy.
Acting Australian Statistician Jonathan Palmer said there would be an investigation into the data:
It is critical that the ABS produces the best set of estimates that it can so that discussion is on what the estimates mean, and not the estimates themselves. To assist in this, the ABS will commission a review with independent external input to develop an appropriate method for seasonally adjusting October 2014 and following months’ estimates. The report on the results of this review will be presented in due course.
As Australia’s most important monthly economic release this is an important move by the ABS to restore credibility to a series that even the RBA was questioning.
The next release is due tomorrow at 11.30am and the banks, which had been expected some give back from last months huge rise, are busily increasing their forecasts. The CBA is now looking for 50,000 jobs to be created from the previous estimate of a fall of 10,000.
It is going to be a minefield for traders and we’ll have full coverage here at Business Insider.