Roy Morgan Research last night released its unemployment estimate for the month of June, with registered an increase in the unemployment rate to 9.7% from 9.5% in May (see next chart).
As explained previously, Roy Morgan Research measures employment differently from the ABS:
According to the ABS definition, a person who has worked for one hour or more for payment or someone who has worked without pay in a family business, is considered employed regardless of whether they consider themselves employed or not.
The ABS definition also details that if a respondent is not actively looking for work (ie: applying for work, answering job advertisements, being registered with Centre-link or tendering for work), they are not considered to be unemployed.
The Roy Morgan survey, in contrast, defines any respondent who is not employed full or part-time and who is looking for paid employment as being unemployed…
Since Roy Morgan uses a broader definition of unemployment than the ABS, it necessarily reports a higher unemployment figure. In addition, Roy Morgan’s measure tends to be far more volatile, owing to the fact that it draws on a smaller sample than the ABS and is not seasonally adjusted.
Both the official ABS unemployment rate and the unofficial Roy Morgan measure tracked each other closely until mid-2010 before diverging sharply (see next chart).
Based on this latest result, the difference between the two non-seasonally-adjusted measures is 4.2%, which is well below above the average 2.4% divergence since the Roy Morgan series commenced in January 2001 (see next chart).
The reasons behind the big divergence between the Roy Morgan and ABS unemployment measures since mid-2010 is a mystery, but might have something to do with the fact that Roy Morgan’s picks-up discouraged workers.
In any event, the various secondary labour force measures – Roy Morgan, DEEWR and ANZ job ads, Westpac unemployment expectations, and ABS job vacancies – all imply the Australian labour market is more fragile than suggested by the official ABS unemployment rate of only 5.5% as at May 2013.