Roy Morgan unemployment falls

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ScreenHunter_04 Feb. 22 12.14

By Leith van Onselen

Roy Morgan Research (RMR) last night released its unemployment estimate for the month of November, which registered a decrease in the unemployment rate to 10.2% from 10.7% in October (see next chart).

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As explained previously, RMR measures employment differently from the ABS:

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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 RMR measure tracked each other closely until mid-2010 before diverging sharply (see next chart).

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Based on this latest result, the difference between the two non-seasonally-adjusted measures has narrowed to 4.6%, which is still well above the average 2.5% divergence since the RMR series commenced in January 2001 (see next chart).

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The reasons behind the big divergence between the RMR and ABS unemployment measures since mid-2010 remains a mystery, but probably has something to do with Roy Morgan’s picking-up discouraged workers. Because the measure is not seasonally adjusted it will probably jump to new highs early next year school leavers hit the jobs market.

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In any event, the trend in both surveys suggests that the Australian labour market remains soft, with jobs growth below the level required to soak-up the growing population.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.