Thursday, June 23, 2011

What is the 'official' unemployment rate?

On the front page of Statistics NZ the unemployment is given as 6.6 percent for the March quarter.

That is the figure provided by the March quarter HLFS.

Yet when using Table Builder the rate appears as 7 percent.

That is a big difference.

And the sets of figures that produce the rate vary yet my understanding is the source for the data is the same.

Now this all may seem pedantic but when official unemployment rates are released a song and dance is made about them. They are taken as a significant indicator of how the economy is faring and add to or detract from business confidence.

NZ hasn't seen an unemployment rate of 7 percent or over this decade. Sorry, this century (according to TableBuilder). Was it there in March?

I will query Statistics NZ. There is probably an explanation but I want to know what it is.

Update: Very quick response from Statistics NZ. Inside two hours. Big tick.

Both figures are from the HLFS.

The 7.0% figure from Table Builder is the number of unemployed persons
expressed as a percentage of the labour force as of the quarter. These
statistics are averages for the three-month period.

The headline 6.6% figure is seasonally adjusted. Seasonal adjustment aims
to eliminate the impact of regular seasonal events on a time series. In the
labour market, cyclical events that affect labour supply and demand occur
around the same time each year. For example, in summertime a large pool of
student labour is both available for, and actively seeking, work. Demand
for labour in the retail sector and in many primary production industries
also increases.

Seasonal adjustment makes data for adjacent quarters more comparable by
smoothing out the effect on the times series of any regular seasonal
events. This ensures that the underlying movements in the time series are
more visible. Each quarter, the seasonal adjustment process is applied to
the latest and all previous quarters. This means that seasonally adjusted
estimates for any of the previously published quarters may change slightly.

1 comment:

Anonymous said...

That rate is still far too low for any real "rebalancing" of the economy.

Although, of course, if you terminated the DBP, there would be no unemployed.