Today’s labour force data from the ABS confirmed that the jobs market remains sluggish, with Queensland’s unemployment rate at 5.9 per cent in seasonally adjusted terms. Unfortunately, the ABS data aren’t very precise for Queensland and it’s hard to have a great deal of confidence in either the seasonally adjusted data, which are highly volatile as I’ve discussed before (Don’t read too much into one month’s unemployment figures – Qld data pretty volatile), or the trend data, which are based on a backward-looking data smoothing procedure that yields some weird results from time-to-time.
For example, the reported drop in Queensland’s trend unemployment rate to 5.7 per cent in December from 5.8 per cent in November is weird. Given the seasonally adjusted unemployment rate has been 5.9 per cent for the last six months, except for November when it dropped to 5.7 per cent before returning to 5.9 per cent last month, my best guess would be the trend unemployment rate is around 5.9 per cent. It’s probably been around 5.9 per cent for the last six months and the lower November figure simply reflects the volatility in the data series.
My guess is that the trend unemployment rate fell in December because the ABS’s data smoothing procedure is now giving less weight to the rogue June 2013 seasonally adjusted unemployment rate of 6.4 per cent than it did in previous months. That is, I suspect the weird drop in the trend unemployment rate in December is due to the data smoothing procedure being compromised by the bad data point from June – another bad data point due to a too small sample of households from Queensland in the Labour Force Survey and consequently a high degree of sampling error and volatility in the data. It would be desirable for the ABS or Queensland Treasury to investigate whether this is the case. Also, it would be desirable for Queensland Treasury to delve a bit deeper into the ABS data it reports on in its information briefs, and to question whether the data it’s reporting on make sense or not.
Finally, while the jobs market remains sluggish, it’s still pretty reasonable by historical standards, particularly if you can recall the much higher unemployment rates in the 1980s and 1990s, as I’ve discussed in an earlier post:
Other commentary on Queensland’s labour market can be found at: