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11 Dec 2015
Unusually strong Australia’s labour force data raises eyebrows – Goldman Sachs
FXStreet (Delhi) – Research Team at Goldman Sachs, suggests that the Australia’s November labour market update was exceptionally strong.
Key Quotes
“The two month cumulative increase in employment was the largest on record (with the exception of January 1988), the unemployment rate falling (to be 50bp lower since July), and the participation rate surging higher. The rate of improvement is certainly hard to square away with contracting domestic demand and more subdued signals from alternative measures of labour market conditions - which draws into focus the statistician’s caution that ~12.5% of the survey sample is driving 90% of the result.”
“This raises material questions about the data quality and it will be important to track how this statistical anomaly resolves over time. In the interim, while these data will likely keep the RBA sidelined in the near term, a broader assessment of labour market indicators is appropriate to calibrate policy. To that end, we flag that still very elevated levels of underutilisation and record low wages growth suggest the economy is still some distance from bumping up against capacity constraints.”
Key Quotes
“The two month cumulative increase in employment was the largest on record (with the exception of January 1988), the unemployment rate falling (to be 50bp lower since July), and the participation rate surging higher. The rate of improvement is certainly hard to square away with contracting domestic demand and more subdued signals from alternative measures of labour market conditions - which draws into focus the statistician’s caution that ~12.5% of the survey sample is driving 90% of the result.”
“This raises material questions about the data quality and it will be important to track how this statistical anomaly resolves over time. In the interim, while these data will likely keep the RBA sidelined in the near term, a broader assessment of labour market indicators is appropriate to calibrate policy. To that end, we flag that still very elevated levels of underutilisation and record low wages growth suggest the economy is still some distance from bumping up against capacity constraints.”