Are the monthly figures from the Australian Bureau of Statistics a bit more rubbery than they should be?
And is the Rudd Government and specifically Finance Minister Lindsay Tanner reaping the downside of their miserly $20 million or so cut in the budget of the Australian Bureau of Statistics Budget in the May budget?
Poor or unreliably figures can mean bad policy. The cut has forced the ABS to change the frequency and size of its samples for a range of statistics and increase the uncertainty and their reliability until economists and others get get a handle on the impact of the changes over the next few months.
The question arises with this morning’s July employment figures from the Bureau, which created more confusion than clarity.
Nearly 11,000 new jobs were created in July as there was slump in full-time employment growth, instead of a fall, as some analysts had suspected might happen.
Complicating the figures was a noticeable cut in the number of new jobs created in the surprise upswing in June.O originally the ABS put that at 29,800. That was cut to around 22,000 with revisions to the jobs data for May and June, so it’s almost certain that the July figures will be re-jigged.
The new sample-based survey surprised with 53,700 new full time jobs created (which is a little odd given the talk of retrenchments at some large and small companies) and 42,800 part time jobs were lost (which does fit with some anecdotal evidence).
But interest rate strategist at Macquarie Bank Rory Robertson blasted the figures in a note written after their release at 11.30 am:
Given the uncertain effects of the crazy cost-cutting shift to a new one-quarter-smaller sample-size, the monthly ABS jobs data are a waste of space for today and the next several months at least. The ABS notes there now is “increased volatility” in its estimates. That is, we have no way of knowing anything about the news/noise ratio of today’s jobs report.
Taking my pick of things to say, the only news I take seriously is that the three-month-average unemployment rate is 4.3%, about 1/4pp above its generational low near 4% in March. With ANZ job ads slumping, particularly in Queensland, NSW and Western Australia, it is clear that the national jobs market is softening along the lines desired by the RBA
On policy, an RBA cut on 2 September remains a given. The only question is whether it’s 25bp or 50bp. In any case, we’re likely to see something like 1-1.5pp worth of rate cuts over the coming year, maybe more. One of the key issues is how far the RBA will have to cut, for example, to reduce mortgage rates from 9.55% to 8.05%.
That is, if the RBA ultimately chooses over the coming year to reduce standard mortgage rates back where they were a year ago, it may need to cut by more than 150bp.
It will be three weeks or so until we see the first set of statistics for retail sales and building approvals prepared under the new regime. Both have been showing the damage the tighter monetary policy, higher oil prices and the extra bank rate rises, have been having on the consumption parts of the economy.
This funding cut, under the cover of `economic rationalism`, is politically motivated: it allows the Government to accept some figures that suit their agenda, and selectively reject others, citing `volatility`. Employment, inflation and GDP figures have been massaged by governments of either persuasion, for their own ends, for decades, but this is truly machiavellian! Hats off to the Rudd regime and their economic conservatives! Notice, that the only sector not subject to cuts is Defence, Security and Police force. Quite right, you can`t let the rabble go around unsupervised not only in the OZ, but also in `our` backyard of Solomon Islands and East Timor.
“Rubbery” doesn’t even start to describe the employment figures fiddle when they haven’t, for many years now, given a realistic picture of employment meaning you were able to support yourself financially with just one job. Every other conjured statistic and qualifying adjective is a politically-motivated fiddle and needs to be legislated against so that the real situation with unemployment is known, recognised, and brought to the attention of the voting public.
This is the first i have heard of the dramatic cut to the funding of the ABS. Whether it be employment statistics or another genre, in my view robust and independently commissioned statistics, made available to the public are as much a foundation of good democracy as an independent judicial system and free media. Very disappointing.
From 1983 on the rules for counting unemployment were repeatedly changed, this to mislead the electorate. In NSW we saw the Carr government change the rules for counting hospital waiting lists to hide the truth.
When the Rudd government cut funding to the ABS concern was immediately raised that this would make it more difficult to track unemployment levels. These figures must be viewed in this light. Are they real, are they out of date, or are they contrived?
ancient history. government have been fiddling the definitions of this data for yonks. rory needs to have a good look at the trend data he’s whingeing about.