The truth about employment trends

Unemployment Trend Feb 09 from ABSEmployment Trend Feb 09 from ABS

The press have hunt­ed out the largest num­ber they can find for unem­ploy­ment in the release: the ‘orig­i­nal’ or raw data that shows an unem­ploy­ment rate of 6.0% for per­sons over 15 years of age. But that’s not the data that the ABS choos­es as tru­ly rep­re­sen­ta­tive of the unem­ploy­ment rate. The Age says 5.6% but the ABS says 4.9% is the trend rate of unemployment.

The Bureau explains (if jour­nal­ists could be both­ered to do their job and read it) why the trend mea­sure is more reli­able:

The smooth­ing of sea­son­al­ly adjust­ed series to pro­duce ‘trend’ series reduces the impact of the irreg­u­lar com­po­nent of the sea­son­al­ly adjust­ed series. These trend esti­mates are derived by apply­ing a 13-term Hen­der­son-weight­ed mov­ing aver­age to all months except the last six. The last six month­ly trend esti­mates are obtained by apply­ing sur­ro­gates of the Hen­der­son aver­age to the sea­son­al­ly adjust­ed series. Trend esti­mates are used to analyse the under­ly­ing behav­iour of a series over time.” Extract from ABS Labor Force release for Feb 09 (empha­sis added)

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