Jobs again inflated by numberwang

Via Credit Suisse:

Fantastic headlines

Employment came in well above expectations, rising by 42K in May, with upward revisions to prior months’ data. Full-time employment rose strongly by 52.1K, while part-time employment fell by 10.1K. The unemployment rate fell sharply to 5.5% from 5.7%, despite an increase in the labour force participation ratio.

Aggregate hours worked spiked by 1.9% over the month, taking year-ended growth significantly higher to 2.3% from 1.4%. By state, the gains in full-time employment were particularly strong in NSW. This is a welcome development in that:

1. NSW has been recording the weakest full-time employment outcomes in the country for roughly a year.

2. NSW households are the most heavily geared in the country.

But beware the sample rotation bias

All of this said, the ABS has confessed that for the sixth time in seven months, it has rotated the sample in favour of higher employment-to-population cohorts. Officials report that this has had a material impact on the NSW employment outcomes.

Indeed, the spike in aggregate hours worked looks quite unnatural given the much lower trajectory of our employment leading indicator, based on NAB business confidence, Westpac consumer confidence and trend growth in loan approvals. Also, the spike in employment appears quite far out-of-line with the employment component of the services PMI, which recently entered into contraction territory.

Investment implications

If we follow the data, the next move in interest rates is up, not down. However, there are serious problems with the data from a benchmarking point of view. Net of benchmark revisions, it looks like labour market slack is increasing – not decreasing. Nonetheless, the RBA has a strong macro-stability agenda, to which the flawed, but strong employment data speaks to. On the employment data alone, it is unlikely that the Bank will be cutting rates anytime soon. That said, the Bank is also paying close attention to marketbased signals, such as the slope of the yield curve and commodity prices. Also, weakness in housing indicators may prove more signal than noise. We remain of the view that the RBA will be cutting rates further this year

David Llewellyn-Smith
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  1. The numberwang is now ceasing to be a variability factor risk with national data, but starting to look a lot more like a concerted, well thought out and deliberate attempt to bullshit us all.

    It is sad that the ABS – the doyen of unpolitical public service – is now being coopted thus

    Just happening far too often to be believable as coincidence, and always running the pro spruiking, pro government, pro MSM way too.

    • DingwallMEMBER

      “……the ABS has confessed that for the sixth time in seven months, it has rotated the sample in favour of higher employment-to-population cohorts”.
      How the hell can they just do this sort of shit…………….. those wangers !

      • I don’t get this either. Statiticians should know exactly how to get a representative sample. The fact that the know that the sample is skewed is almost an admittance of political interference.

        Is this the ABS telling us their numbers should not be trusted because they are being pressured?

      • My understanding is that they don’t do it by sampling, they do it by modelling. Much easier to arrive at bullshit numbers.

        Not sure if they do the same here but in the U.S. they make ‘assumptions’ about the number of jobs created as the population increase: births/deaths and immigration. Added to which they also make assumptions about the number of businesses that get started and the flow-on effect on jobs. Nothing concrete … all ‘makey uppey’.

    • Nothing is happening here that the feds do not want to happen. Same with lower wage growth form massive increases in labour supply via immigration. It was the strategy used in the USA to destroy the middle class and same one being used here. If you don’t believe what your eyes are telling you then you are conspiracy nut.

      Ultimately the nobility here want a Neo-feudal society

      The total corporate coup will come with the housing/banking bust. Bailout followed by crippling austerity to pay for bailout which was infact paid for with the CLF (Printed Money)

    • Self-censorship is is effective as it is nefarious.
      In the case of the ABS, it is instigated by the implicit threat of toe the party line, or else. One or two rounds of cuts serve to set an example. No words to the effect need to be spoken.

  2. Hasn’t someone been posting for several days that the data is bullshit specifically because it has been rotated into higher income populations ?


    • I must admit I didnt quite see it that way. I thought the Australian markets boughts the ABS bullshido, but the offshore markets sold AUD off overnight – though it has been bid up locally again.

  3. One way to fix the unemployment rate; find areas of high employment then 95 employed people out of every100 surveyed will have a job!! Problem solved!!