13 Feb 2015
ABS chief David Kalisch: Don't take the employment numbers too seriously
FXStreet (Bali) - Head of the Australian Bureau of Statistics David Kalisch, via the Sydney Morning Herald, made some disheartening comments, noting that Australian employment numbers should not be taken too seriously.
Key points
The new head of the Bureau of Statistics has a disarming reply to people who complain that the bureau's unemployment data is unreliable. It's to not rely on it.
The January unemployment rate was 6.4 per cent. David Kalisch says the media and markets should focus instead on what the bureau calls its 95 per cent confidence interval, reporting that the bureau is confident the true rate is between 6 per cent and 6.8 per cent.
And he says even those broad ranges should not be treated as gospel. "You've got to look at whether the numbers are in line with other economic conditions. You've got to ask: does this number have a clear alignment with other economic indicators and expectations?"
His immediate priority is more money, a lot of it. When his predecessor as Australian Statistician Brian Pink left in January 2014, he wrote that the bureau had barely enough cash to "keep the lights on".
Kalisch says he believes those problems are behind the survey, but he says people need to recognise that it is just that – a survey, of about 26,000 households conducted once a month. "Any sense that the number is exactly whatever we report to the second decimal point is not an accurate use of those numbers," he says.
But when asked whether the bureau's numbers were accurate to even the first decimal place, he deflects the question and says it is "wisest to look at the published confidence intervals". They show the bureau is not always confident to first decimal place. They put the true unemployment rate at anywhere from 0.4 of a percentage point lower to 0.4 of a percentage point higher than the published rate. Kalisch says there's nothing new in this. The range has always been wide.
The bigger problem with the figures is that they are still being prepared on outdated stand-alone computer systems. Some are up to 40 years old and can't easily talk to each other. They are kept going by the idiosyncratic knowledge of the ABS staff who have nursed them for years. "To make things work requires a number of people with insights into that particular way of, operating," Kalisch says, acknowledging that "knowledge retention is an issue".
Key points
The new head of the Bureau of Statistics has a disarming reply to people who complain that the bureau's unemployment data is unreliable. It's to not rely on it.
The January unemployment rate was 6.4 per cent. David Kalisch says the media and markets should focus instead on what the bureau calls its 95 per cent confidence interval, reporting that the bureau is confident the true rate is between 6 per cent and 6.8 per cent.
And he says even those broad ranges should not be treated as gospel. "You've got to look at whether the numbers are in line with other economic conditions. You've got to ask: does this number have a clear alignment with other economic indicators and expectations?"
His immediate priority is more money, a lot of it. When his predecessor as Australian Statistician Brian Pink left in January 2014, he wrote that the bureau had barely enough cash to "keep the lights on".
Kalisch says he believes those problems are behind the survey, but he says people need to recognise that it is just that – a survey, of about 26,000 households conducted once a month. "Any sense that the number is exactly whatever we report to the second decimal point is not an accurate use of those numbers," he says.
But when asked whether the bureau's numbers were accurate to even the first decimal place, he deflects the question and says it is "wisest to look at the published confidence intervals". They show the bureau is not always confident to first decimal place. They put the true unemployment rate at anywhere from 0.4 of a percentage point lower to 0.4 of a percentage point higher than the published rate. Kalisch says there's nothing new in this. The range has always been wide.
The bigger problem with the figures is that they are still being prepared on outdated stand-alone computer systems. Some are up to 40 years old and can't easily talk to each other. They are kept going by the idiosyncratic knowledge of the ABS staff who have nursed them for years. "To make things work requires a number of people with insights into that particular way of, operating," Kalisch says, acknowledging that "knowledge retention is an issue".