Policy makers at Norway’s central bank were largely unfazed by a report last week that showed unemployment jumping to its highest level in decades as they all but abandoned plans to cut interest rates further.
Why? Because they prefer a different measure.
While surveyed unemployment -- a benchmark method used globally – jumped to 5 percent in July, the jobless rate as measured by the country's unemployment agency was almost 2 percentage points lower.
The measures have never been so out-of-whack with each other since the boom-and-busts era of the 1990s, according to Oeystein Doerum, chief economist at DNB Markets. While the estimates from the survey have "always been higher,” the difference is usually around 0.7 percentage point, he said.
The widening gap between the data delivered by Statistics Norway's Labor Force Survey (LFS) - which asks a sample of working-age people about their employment status - and the Norwegian Labor and Welfare Administration, NAV - which measures those who are officially registered as unemployed - even prompted the central bank to release a special note to try to explain the phenomena.
In it, however, it had to concede it didn't have a convincing answer.
"LFS has captured a significant increase in unemployment among young people,” Norges Bank said in the Sept. 22 note. "But beyond that we do not find an adequate explanation for the difference.”
Erik Bruce, an economist at Nordea, the largest bank in the Nordics, is similarly confounded. He puts forward two explanations. The first is that the survey includes an unusually significant number of young people who are looking for a job but haven’t registered as unemployed; the second is unexplained variations in the sample, or “statistical noise”.
The central bank looks primarily at registered unemployment when trying to assess the state of the economy. By that measure, “capacity utilization appears to be higher than expected,” it said last week, before noting that unemployment as measured by the LFS “has been slightly higher than projected.”
The statistics office is confident that its measure captures a truer picture.
“I would say that the LFS figures provide a better overall picture of unemployment in Norway,” Lasse Sandberg, manager of labor statistics at Statistics Norway, said by phone.
The stakes are high, of course. A failure to judge the true level of joblessness risks entrenching people outside the labor market. The ultimate question is whether the central bank is correct in its assessment that it's probably done with easing.