It is always a joy to see Possum Comitatus breakdown the gobbledegook surrounding government agency statistics.
The Statistical Reality of the Unemployment Figures post was no exception and, although a job lost involves real pain (something we know well in the NSW Northern Rivers), it was enlightening to see how the statistical margin of error played out in the latest numbers:
The actual Labor Force Survey results can be easily downloaded, and toward the end of the document – pages 28 and 29 to be exact – the ABS has gone to the trouble of providing the standard errors of not only the point estimates of all the unemployment metrics, but also the standard errors of the monthly change in those metrics. It's quite nice of them to do that since the press doesn't seem to pay any bloody attention to them whatsoever. But their incompetence aside, what these standard errors allow us to do is create a maximum margin or error for the unemployment figures using a 95% Confidence Interval – just as we do with the polling, and more particularly, Pollytrack.....
First up, the change in Full Time job numbers. The seasonally adjusted point estimate suggested that 43,900 full time jobs were lost between November and December of 08. We can be nearly 100% confident that the 43,900 figure that is getting so much attention isn't actually true.
What we can say is that there is a 95% probability that the true change in full time job numbers was somewhere between a gain of 6300 full time jobs and a loss of 94100 jobs, for the margin or error attached to the 43900 full time job loss figure is a whopping 50200. .....
On the trend figures, the unemployment rate remained steady at 4.4%, full time employment dropped by 11,200 nationally and total employment increased by 2000.
Far from this being a terrible result requiring widespread bouts of wrist slashing – in the broader scheme of things and considering the state of the international economy, it's probably a remarkably good result. I say 'probably' because we must acknowledge the large uncertainty involved in the figures - the point estimates really aren't the gospel they are too often made out to be.
What happens in the future is unknowable, things might tank, things might not - but what we should all be aware of is just how much uncertainty is actually contained in these figures.
Of course it would be too optimistic to hope that Malcolm Turnbull and friends would approach these figures with a degree of calm.
Over at Liberal Party headquarters they were shouting out that there will be More Than Half A Million Australians Out Of Work and waxing lyrical about the Howard years.
While Access Economics (in attention getting language aimed at front page media coverage) is predicting 300,000 jobs will be lost in the next twelve months, but also appears to be predicting modest national growth by 2009-10.
By late last night Channel 10 News had hysterically taken the figure higher to a million unemployed
Think I'll place my trust in Poss and wait for more concrete figures to come in over the next year. Access Economics director Chris Richardson now cries Wolf! so often that I no longer find his media announcments all that credible.
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