The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Tuesday, October 18, 2011

The number of people on the "dole" (getting benefits) is *declining* NOT rising (chart)

In its Board Minutes today the RBA referred to a new dataset that nobody in the market, and economists more generally, seems to be aware of. And it is bloody interesting stuff. In short, the relevant government department in Australia (DEEWR) publishes a monthly time-series of the absolute number of people who receive unemployment benefits (thanks to UBS's Matt Johnson for tracking this down for me).

I have pulled these data off their website back to August 2009. The sample size is about 550,000 people, and over 600,000 once you include a few other series they publish. That means we are getting close to 100% of all of the people the ABS estimates are "unemployed" in its much, much smaller unemployment "survey", which is notoriously volatile and subject to wide standard errors.

Critically, the actual unemployment benefits series (see chart below) shows us that after a spike during the floods in December through March (likely also lifted by seasonality), the number of people receiving the dole has declined solidly through to August. In fact, it is currently the lowest it has been in 2 years. Importantly, this is during a period in which the Australian labour force has been growing strongly (driven by population growth). So in percentage terms, the decline is likely to be much more dramatic than the absolute numbers below suggest.