The employment data looked great on Thursday – 42,000 jobs, unemployment down from 5.7% to 5.5%. Hours worked jumped 1.9%, taking the annual growth from 1.4% to 2.1%.
Unfortunately it was rubbish.
The Bureau of Statistics uses sampling to estimate employment (it doesn’t actually count jobs), and has confessed that for the sixth time in seven months the statisticians have rotated the sample in favour of higher employment-to-population ratio cohorts.
The spike in employment and hours worked reported on Thursday is way out of line with all other data, especially the services PMI, which is contracting, and that’s where most employment is.
It’s out of line because the ABS data are wrong, caused by sample rotation rather than reality.
If you went by the data, the next move in Australian interest rates would be up. In fact, unless there is a big improvement in the underlying data soon, there will be another rate cut this year.
In turn, that means the Australian dollar’s strength in the second half of this week, caused by the weak inflation number in the US, is likely to be short-lived.
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