India Economists Brace for Data Windfall: Daily Jobless Rateby
Private data company pioneers change as government plans stall
Unemployment rate may be hard to read without payrolls data
Economists who bemoan the frequency of India’s once-a-year official unemployment data are about to get deluged with information. Whether it’ll be any more useful is another question.
Starting next month, a Mumbai-based private research firm is planning to release a daily, weekly and monthly jobless rate for Asia’s third-largest economy. The Centre for Monitoring Indian Economy Pvt, known as CMIE, will sample 158,000 households and make the results freely accessible in conjunction with BSE Ltd., formerly known as the Bombay Stock Exchange.
“The world has changed today and there’s a need for faster frequency information,” Mahesh Vyas, CMIE’s managing director, said in an interview. “Whether it is monetary policy or it is financial markets in general, or even for the political system to understand how deep is the problem on unemployment, none of the existing government outputs on unemployment are adequate.”
Access to real-time employment data will complement efforts by India’s government to modernize its economic policy making arsenal, including an inflation target for the central bank and revamped gross domestic product calculations. At the same time, it may be a while before economists figure out how to read a standalone jobless rate in a country with no regular payroll data where 90 percent of workers are unregistered.
“It’s a good development," Shilan Shah, a Singapore-based economist who covers India for Capital Economics Ltd, said by phone. “You’d have to wait and see how the time series unfolds and then evaluate things in a year’s time.”
A reliable reading on employment would allow the central bank to better utilize tools that predicts inflation by measuring changes in the unemployment rate. Central bank Governor Raghuram Rajan, who is pushing to hit a 5 percent inflation target by March 2017, said earlier this year that he would add employment to the mix of indicators he uses to guide interest rates if there was a good series.
Rajan already cites CMIE’s investment data in his monetary policy statements, and Vyas said he met with central bank officials last week to discuss the new employment data. Reserve Bank of India spokeswoman Alpana Killawala didn’t reply to an e-mail seeking comment on Tuesday.
“I’ll be very happy” if the government or central bank starts analyzing the data, said Tirthankar Patnaik, a Mumbai-based economist at Mizuho Bank Ltd. Still, he added: “As an economist I’ll be much more interested to know where jobs are being created.”
A mishmash of secondary labor indicators is sending mixed signals about an economy that is officially growing at annual rate of 7.4 percent. Employment in eight selected industries such as leather and transportation fell in the three months through June, according to the labor department. At the same time, Nikkei and Markit Economics’s November services purchasing managers’ employment reading was the highest since July.
While seven federal agencies publish labor-related reports, none are timely enough to seriously affect policy. A benchmark survey that comes out every few years years pegged the jobless rate at anywhere from 2.2 percent to 5.6 percent depending on statistical approach. A more recent report by the labor department estimates the rate at 4.9 percent, using data obtained in the first seven months of 2014.
Prime Minister Narendra Modi’s government is considering a plan that would add staff at the statistics agency to produce a quarterly unemployment report. Details will be released soon, Chief Statistician TCA Anant said by phone on Monday.
“There is a difference in the way we approach data collection,” Anant said. “There are a number of steps in the government which need to be followed before we can activate it.”
CMIE, a company that’s nearly four decades old and specializes in business and economic databases, surveys about 1,400 households, or more than 4,000 people per day, and collates the data via smartphone. It says that’s enough for a daily unemployment estimate. A monthly report will add a rural versus urban breakdown, while details on states, age and gender will be released every four months, Vyas said.
CMIE’s reports initially will go back a few months at most, said Vyas. He said the company will withhold its real-time data if the numbers prove to be too volatile. Besides unemployment, the company will publish indexes of consumer sentiment, consumer expectations and current economic conditions, in cooperation with the Survey Research Center at the University of Michigan.
"In India, where personal consumption accounts for more than two-thirds of GDP, consumer confidence plays a significant role," the BSE said in an e-mailed reply. The hope is that "this experiment would be successful and hence would help further to generate indicators that are reliable as well as acceptable," it said.
It’s not uncommon for the public and private sectors to publish parallel data. In the U.S., for instance, economists follow the ADP Research Institute report on payrolls as well as official figures. In Nigeria, San Francisco-based Premise Data Corporation worked with Standard Chartered Plc to create a consumer price index tracker. The company relies on a global network of contributors collecting data they send by phone.
“Data are the ultimate public good, and the world is getting more complex and volatile, which means measurement is becoming increasingly fragmented,” Joe Reisinger, who co-founded Premise, said in an e-mailed response to questions. “We need additional data sources to help us to better understand these changing dynamics, and this is where the private sector can play an instrumental role.”