There’s been some excitable commentary on yesterday’s jobs figures from the Australian Bureau of Statistics — and none of it has been helpful.
Labor’s Brendan O’Connor tweeted that unemployment had “jumped” to 6%. The ACTU warned about unemployment “hitting 6%” and accused the government of having no jobs plans. That’s hardly unexpected. But even Fairfax’s normally excellent Mark Kenny wrote about “the worst jobless figures since Malcolm Turnbull deposed Tony Abbott” that “have again highlighted Australia’s anaemic economic growth, boosting the chances of another interest rate cut and putting pressure on Treasurer Scott Morrison to protect jobs and confidence”.
It’s lots of fuss over one, seasonally adjusted monthly figure that the ABS has made clear is problematic. Yet again — as it has been doing now for months — the ABS led its announcement by talking about trend numbers: “Trend employment has continued to show strong growth” was the first line of its media release. This is a clear message from the statisticians not to focus too much on the seasonally adjusted number. Trend data gives a better idea of the way the figures are tracking because they smooth out the volatility in the seasonally adjusted data — and over the last year, due to methodological changes and problems, those numbers have been volatile indeed.
But even on a seasonally adjusted basis, 298,300 new jobs were created from January 2015 to last month, which is not too different to the 302,000 created on a trend basis. And commentators missed that hours worked rose 0.7%. That’s a big rise given there was a fall in jobs — especially 40,000 full-time jobs (there were 32,000 part-time jobs to offset that fall, but part-time jobs can’t make up for full-time hours).
The number of people looking for full-time work rose 25,600 to 544,100 and the number of unemployed persons looking for part-time work increased 4600 to 217,300. That is a sign of people being encouraged back into the work force — and the participation rate was unchanged at 65.2% (seasonally adjusted and trend). These are positive signs — and by the way, the strong US jobs market has a participation rate of 62.7%.
When the labour force data shows a strong result — as it did for much of 2015, but especially October, November and December — we’re all sceptical about the data, and rightly so. But when a set of figures comes out that show a weak performance on one set of indicators, suddenly the numbers are gospel truth and a problem for the government.
Given what the ABS itself has been saying for months, we should always be sceptical of the numbers — as the Reserve Bank is trying to do. This is what RBA governor Glenn Stevens told the House of Representatives Economics Committee a week ago in Sydney:
“I think it is hard to ignore the conclusion that we have had more jobs growth and lower unemployment than we thought. So in some expenditure components somewhere — I am not quite sure where — there is economic activity happening and demand occurring and, so far anyway, it did not require the pick-up in non-mining investment. I admit I am a bit surprised that that is the outcome, but I think it is pleasing that we have had that outcome …”
None of this takes the onus off Malcolm Turnbull and Scott Morrison — whose National Press Club address this week appears to have badly tarnished what remaining good will he had in the media – to demonstrate they have a coherent economic agenda. Whether it’s 5.8% or 6%, unemployment is too high, and growth is too low. But it does mean we should be as open to good economic news as we are, seemingly, we are about bad news.