The truth about employment trends

There's a level of hysteria to the reporting of the February employment data from the Australian Bureau of Statistics.

Better to look yourself at the ABS report (it's quite readable) where it is clear that, although unemployment is trending up after a long decline, there is no need for alarm about current levels. Australia still enjoys historically low levels of unemployment, while employment trends—although much flatter in the past 12 months—are still heading upward.

See the graphs from the ABS report below: they show, at a glance, why the media pessimism is misleading.

The press have hunted out the largest number they can find for unemployment in the release: the 'original' or raw data that shows an unemployment rate of 6.0% for persons over 15 years of age. But that's not the data that the ABS chooses as truly representative of the unemployment rate. The Age says 5.6% but the ABS says 4.9% is the trend rate of unemployment.

The Bureau explains (if journalists could be bothered to do their job and read it) why the trend measure is more reliable:

"The smoothing of seasonally adjusted series to produce 'trend' series reduces the impact of the irregular component of the seasonally adjusted series. These trend estimates are derived by applying a 13-term Henderson-weighted moving average to all months except the last six. The last six monthly trend estimates are obtained by applying surrogates of the Henderson average to the seasonally adjusted series. Trend estimates are used to analyse the underlying behaviour of a series over time." Extract from ABS Labor Force release for Feb 09 (emphasis added)

Tags for this entry: policy data evidence statistics employment abs