Australia's Jobs Data Roller Coaster Seen Taking Another Loop

  • Economists see 10,000 drop in employment after 71,400 rise
  • Jobs market and jobs data "two different animals:" Bloxham

Australia’s volatile labor force data is forecast to give financial markets another thrill, with economists predicting December figures will show a sharp turnaround after jobs surged the most in almost 28 years in the previous two months.

Data due next Thursday will show seasonally adjusted employment fell 10,000 in December following a 71,400 rise in November, according to the median forecast from a Bloomberg survey of 23 economists. The estimates range from a fall of 45,000 to an increase of 15,000.

Economists have had difficulty forecasting the direction and size of monthly changes in employment. The November surge, which followed an unexpected 56,100 increase in October, triggered renewed skepticism about the accuracy of the figures, which the Australian Bureau of Statistics has acknowledged in the past.

“It’s extraordinarily hard to forecast the monthly movements in the jobs survey for Australia and the major reason for that is that there are big measurement issues,” said Paul Bloxham, chief Australia economist at HSBC Holdings Plc who estimates that employment fell 25,000 in December. “To a large degree you’re not necessarily forecasting what is happening in the labor market but trying to forecast what is happening in the labor force survey and those two things are quite different animals.”

Economists forecast the country’s jobless rate rose to 5.9 percent in December from 5.8 percent, according to the survey.

Calculation Review

The bureau’s difficulties in providing reliable employment data peaked in the second half of 2014 when the chief statistician called for a review of the calculation method. The ABS also revised some previously published numbers at that time, leaving policy makers and economists unsure of the true state of the labor market.

The ABS surveys about 26,000 households for its jobs data and replaces one eighth of the group each month. 

When November data was released on Dec. 10, the Australian dollar gained against all of its 16 major peers and three-year bond yields rose to their highest level for 2015.

Adam Boyton, chief economist in Australia at Deutsche Bank AG, says employment growth in 2015 was probably overstated by between 10,000 to 13,000 a month.

“While we expect employment growth over 2016 will be weaker than that seen over 2015, the pace of jobs growth should be sufficient to see the unemployment rate move sideways – at worst,” Boyton said in a research note.

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