NAB reaction:
- Employment surges a record 121k in August — but can you believe it?
- ABS says the figures are genuine, but it’s hard to accept them — the biggest ever increase in the series, but total hours worked were flat!
- Looking through the volatility of the past few months, it is clear that labour demand is improving
- RBA … are still on hold for some time…at least until they get a good run of reliable labour market figures from the ABS!
- The ABS has investigated the increase and has concluded that there were no statistical or sampling reasons for the outlier.
- But despite the ABS’ denial, the size of the August rise is hard to believe
- The various changes the ABS made to the labour force survey methodology in July appears to have clearly impacted on the outcomes in the past 2 months. In July we saw a fall in employment and a jump in the unemployment rate from 6.0% to 6.4%, in August we see a record gain in employment when the domestic economy remains quite soft. The truth, of course, lies somewhere in between these extremes
- The leading indicators have been suggesting better labour demand, but employment growth should be averaging only around 15K per month
- Only last week the RBA was telling us that a consistent improvement in the unemployment rate would not happen until 2016, so they are unlikely to believe figures that suggest it has already started!
- The likelihood is that much of today’s gain will be reversed over the next few months. which would see the unemployment rate drift higher. So today’s data will not change the RBA’s policy stance
The NAB provide an interesting graph:
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