Australia’s Jobs Growth Too Good to Be True as Data Revised

By Michael Heath

Photographer: Carla Gottgens/Bloomberg

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Australia’s record jobs growth in August was too good to believe.
The statistics bureau today said it will drop the widely watched seasonally adjusted figure, which showed the nation of 23 million people added 121,000 jobs in August, in favor of its raw data, which showed 32,100 started work.
“No one believed the outsized August report,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. “But there is still a clear picture of an improving labor market.”
Large swings in employment data are making it difficult for policy makers and investors to gauge the strength of the economy, with central bank Governor Glenn Stevens yesterday describing the figures as “unusually volatile.” The jump in
August jobs followed a surge in seasonally adjusted unemployment to a 12-year high of 6.4 percent in July.
The bureau said that it will review how it calculates the adjusted data after seasonal patterns in labor hiring in previous years didn’t occur in 2014.
The Australian dollar, which rose almost half a U.S. cent after the August jobs data were issued, fell after the bureau’s statement today. It was trading at 87.65 U.S. cents at 4:50 p.m. in Sydney, from 88.11 before the release.
Economists revised their estimates for tomorrow’s data following the statement. Australia probably added 15,500 jobs in September and the unemployment rate held at 6.1 percent in the month, a Bloomberg News survey of 22 analysts showed. Prior to the statement, they had forecast a seasonally adjusted fall of 30,000 jobs and a rise in the unemployment rate to 6.2 percent.

‘Some Time Yet’

“Labor market data have been unusually volatile of late,” Stevens said in yesterday’s statement after leaving interest rates unchanged at a record-low 2.5 percent. “The bank’s assessment remains that although some forward indicators of employment have been firming this year, the labor market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently.”
The data revisions will make for a more interesting day in financial markets tomorrow, according to Sean Callow, a strategist at Westpac Banking Corp. in Sydney.
“Now that we’ve got a more plausible starting point, it makes it more interesting in a way really because you don’t have to be distracted by this extraordinary August number,” he said. “It’s still going to be messy and the unemployment rate, who knows, so there’s still a lot of uncertainty over the release tomorrow. The employment report is probably the most reliable source of volatility for the Aussie.”