Federal Treasurer Joe Hockey has admitted he is worried about fluctuations in monthly job figures compiled by the Australian Bureau of Statistics, after the collecting agency yesterday owned up to problems with its employment series data from July and August.
According to the Guardian, Hockey will take his concerns about the “volatility” of the employment figures to cabinet in a few weeks, along with some options to make the ABS “more contemporary”.
“I’ve said on a number of occasions the numbers can be volatile out of the ABS, especially when they’re on a monthly basis,” said Hockey.
“I am unhappy with the volatility of the series.”
Hockey’s comments came just before today’s release of the September employment figures, which the ABS said on Wednesday would not include the effect of regular seasonal influences on data.
The ABS reports the number of people employed in Australia decreased by 29,700 people in September to 11.5 million people. The unemployment rate increased by 0.1% during September and is now at 6.1%.
Acting ABS statistician Jonathan Palmer said in a statement on Wednesday the seasonal adjustments would also be removed from the July data, and from the August figures, which recorded a boost of 121,000 new jobs, the largest monthly increase since 1978.
The ABS said there was “little evidence of seasonality” in July, August and September and so it would set the seasonal factor for those months to zero. This means there will be revisions to the previously published estimates in July and August.
“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,” said Palmer.
“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.”
But Tim Harcourt from the University of New South Wales Business School does not believe the comments are cause for alarm, telling SmartCompany there is no indication of impropriety on behalf of the ABS
And Harcourt says, when compared to other statistical collecting agencies around the world, the ABS is among the best.
“There always has to be some seasonally adjusted factor in job figures,” says Harcourt.
“Otherwise you would say jobs selling ice cream would be increasing each summer.”
Harcourt also says he sees no issue in the ABS asking for help from external consultants, as long as there are no vested interests at play.
He says the important thing to remember is that in a 24-hour news cycle, monthly data like the ABS job series will always be “very volatile”.
“You can get structural changes in a series if the definitions change, but the important thing is to spell out what the changes are,” he says
Alan Oster, group chief economist at National Australia Bank, also downplayed the comments, telling SmartCompany all the ABS is doing is choosing not to publish seasonally adjusted data.
“They are not sure the patterns they are seeing with be maintained,” he says.
“We will have to wait for the original data to see what happens.”
Oster says while the ABS employment series is a critical indicator of the performance of the economy, he suspects from a market point of view, the removal of the seasonal adjustments will be ignored.
“What would normally happen is you would have 160,000 additional jobs in September, so the seasonal factor would be subject of the 160,000 jobs,” Oster says.
“So if you didn’t get a big rise in September, which I suspect you wouldn’t, you would have a massive fall.”
Oster says the situation reflects recent changes to the ABS’ methodology for collecting job figures.
“They changed all the definitions but they didn’t have a period of overlap to see what would happen,” he says.