Am I the only one in the world who believes today’s Australian Bureau of Statistics Labour force data?
The highlight was a 0.3 percentage point fall in the unemployment rate, down to 5.9 per cent, a result which put a rocket up the Aussie dollar and saw the bond market tank. The result has been met with disbelief and skeptisim usually reserved for predictions for the Melbourne Cup.
So how believable is that 0.3 percentage point fall in the unemployment rate in just one month?
Well, let’s have a look at history and other times the unemployment rate has taken a 0.3 percentage point leg down.
Since 2000, there have been seven times when the monthly unemployment rate has dropped by 0.3 percentage point.
What happened the next month when this happened in the past?
On four occasions, the unemployment rate stayed at the new lower “unbelievable” levels; twice it fell again and only once did it kick higher and on that occasion is rose by just 0.1 percentage point.
What happen three months later?
On six (out of seven remember) occasions, the unemployment rate was below the shock result and only once was it higher, again that rise was just 0.1 percentage point.
What happened six months later?
One five occasions, the unemployment rate was lower still, once it was the same at the new lower level and only once was it higher and, coincidently, that was also just 0.1 percentage points above the stunning result.
So if those seven precedents are any guide, my guess is that next month, the unemployment rate will be steady 5.9 per cent; in three months it will be 5.8 per cent and in six months it will be either 5.6 or 5.7 per cent.
There you go!