Thursday, December 10, 2015

Jobs growth is nothing like the 71,375 Michaelia Cash trumpets

No one can accuse Employment Minister Michaelia Cash of failing to take advantage of an opportunity.

Presented with official employment figures that were literally incredible (impossible to believe), she took them at face value and trumpeted them in tweets and in a press conference as a triumph for her government.

There were 71,375 more Australians in jobs last month and 301,725 more in jobs over the year, and since January the unemployment rate has tumbled from 6.4 to 5.8 per cent.

"It equates to around 2500 jobs per day," she told the press conference. "Over the calendar year, it's the highest jobs growth since 1989."

She could have added that it equates to one new job every 12 seconds, which it does if the jobs were only offered in working hours. It's even more than the 56,100 new jobs created in October, and way above the long-term average of 15,000 per month...



But it's not the real thing. The Bureau of Statistics makes that pretty clear. It's had a run of misfortune with its sample rotations.

The employment survey is massive - 26,000 houses and flats each month, representing about 50,000 people. But they are not always the same people each month. Every survey one-eighth of the survey is "rotated out" and a new one-eighth is "'rotated in". It stays for eight months.

Occasionally, the one-eighth that is rotated in is very different from the one-eighth that is rotated out, making the number of people in work appear to either jump or fall, even if the employment status of everyone in the survey hasn't changed.

It happened in October, and the bureau was upfront about it. It said then that only half of the reported jump in employment would have been seen if it had examined just the participants present in both surveys.

Now it has happened again, for the second month in a row. The bureau says that if it had restricted itself to comparing like with like, employment would have climbed a mere 5300 in November, a fraction of what was reported.

The dollar soared more than three-quarters of a cent on the news, climbing back up above 73 US cents. The traders weren't waiting to find out the truth, which is probably that employment is growing, but more slowly than we are being told.

The minister was asked whether she had concerns about the reliability of the figures. She said she did not.

In The Age and Sydney Morning Herald