For the umpteenth time since it was released I heard market commentators today make the statement “Australia’s December’s unemployment data was unambiguously strong’ when discussing the potential for further monetary easing. Yes, the seasonally-adjusted-yet-highly-unreliable figures were strong – the unemployment rate dipped to 6.1% from 6.2% in November with full-time employment surging by 41,568. Massive numbers, yes, Believable? No.
Looking at the State and Territory breakdown Queensland and Victoria were responsible for the vast majority of the increase in full-time employment. Putting the 41,568 figure into perspective it was the largest monthly gain since February 2011 and largest December increase since 1987! It could be correct, although, given this data is seasonally-adjusted, you do have to wonder how this occurred at a time when much of the workforce was on holidays?
Male full-time employment was led by a 15,421 increase in Victoria, the largest monthly increase since March 2013, with movements in other States and Territories far more modest in nature.
Female full-time employment was led by a 31,211 increase in Queensland, the largest monthly increase on record, while the other States and Territories combined recorded an overall decline. Is this believable? Can female full-time employment swell by a record amount in Queensland and not other parts of the country? The answer, almost certainly, is no. It’s yet further evidence that the ABS continue to battle with seasonality despite changes to survey methodology made last year.
When it comes to the RBA monetary policy meeting next week labour market conditions will make up a large proportion of their discussion. Given reliability issues with seasonally-adjusted ABS data they’ll almost certainly be focusing on the trend series, along with other complementary data. They will NOT be basing their decision on the seasonally-adjusted numbers, beware those who state otherwise.