This afternoon I caught up with Ben Scott, who works as a Research Assistant in my business Adept Economics, to discuss the April Labour Force data published by the ABS today, as well as the possible shape of the eventual economic recovery (e.g. v-shaped, u-shaped, or Nike swoosh). I’ve uploaded our conversation, recorded using Zoom, to YouTube.
Pete Faulkner has a great summary of today’s data in his latest Conus blog post in which he notes:
…the real surprise came was in the unemployment rate. This had been forecast anywhere from about 8-9% (with some outliers even suggesting as high as 10%). The reality was a rather more pedestrian, and very surprising, lift to just 6.2%. The culprit for the wide miss was the fact that the Participation rate (the proportion of the working age population who are either in work or looking for work) fell a record 2.5 ppts to just 63.5. Had the PR remained at its previous level of 66 then the unemployment rate would have risen to 9.7%.
So, as I mentioned in my chat with Ben, the Australian unemployment rate is effectively nearly at 10%, if we count the people who gave up looking for work as effectively unemployed. Performing the same calculation Pete made for Australia using the Queensland data, the Queensland unemployment rate would be 10.6% instead of 6.8%, if we hadn’t had huge numbers of people give up the search for work and drop out of the labour force.
I don’t know anyone who believes the unemployment rate is what the ABS says it is.
It fails the “pub test”.
The ABS will argue the numbers reflect their definition.
But the problem is more than definition.
It’s whether people place trust the numbers reflect what they “feel” the economy is performing.
After all isn’t that one of the main points of economic indicators?
A lot of people have been saying there’s a problem with these and other socio-economic indicators the ABS reports on.
This is a serious risk for the ABS.
When ordinary people feel so isolated from numbers they will ignore them as “fake news”.
The reputation of the ABS In the general public has just dropped a notch with today’s unemployment numbers.
Yes, that’s a very good point Alistair. Thanks for the comment.
Hi Gene et.al.,
The jobless statistics seem to me to be grossly skewed by the JobSeeker program. Whilst over 1Mil are now registered for inclusion in the unemployment statistics, over 6Mil are effectively and artificially removed from these statistics because they have been placed by government into the JobSeeker program, even though most of these have not received a single JobSeeker wage. Perhaps you could comment on this? I believe most of these hidden unemployed will need to be converted back into the unemployment statistics within the next couple of months, thereby severely increasing our unemployment rate to above 20% and causing widespread lack of confidence in the integrity of the economic statistics in this country.
In addition, it is widely accepted that our unemployment statistics under-report on the basis of the unrealistic definitions now in place to describe unemployment (eg: 1 hour work per week and you are described as ‘employed’). Perhaps it would be better if the unemployment statistics were routinely reconciled with the statistics around weekly hours worked in an endeavour to better describe employment performance in Australia.
(B.Com, LLM, FCPA)
Thanks Alan. Yes, good point about the impact of the JobKeeper program. Certainly the unemployment rate would be massively higher without it. I’ll try to comment further on the jobs situation in a future post.