Wednesday, August 22

Is the DEEWR lead indicator leading again?

For a while there, the DEEWR monthly leading indicator of employment looked like a lag indicator. With the August print, the lead indicator is now pointing north while the cyclical employment indicator is still pointing south.

Okay, so it is too early to make anything of this. For the indicator to flip we need six straight rises/falls in a row. But there is a slim possibility that we might see things improve (or at least that is what this month's data suggests).

The official explanation ...
DEEWR’s Monthly Leading Indicator of Employment (Indicator) has risen in August 2012, after falling for seven consecutive months previously. The Indicator’s turnaround is attributed to three of the Indicator’s four components—only the ANZ Newspaper Job Ads series is continuing to subtract from the Indicator’s growth rate. It is too early to confirm that a renewed quickening in the pace of employment growth above its (revised) long-term trend rate of 1.7 per cent per annum is in prospect, because the Indicator has risen for fewer than six consecutive months. Cyclical employment, which appears to have reached an inflexion point recently, has resumed its downward trajectory (having fallen for eighteen consecutive months in August 2012).
Personally, I am a little more pessimistic. I would not be surprised if the unemployment rate crept up for the rest of this year.

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