Some things I have not looked at for a while

At 698, the Baltic Dry Index is bottom-feeding again (but still above its February 2012 minimum of 647).

The DEEWR leading indicator rose for the 5th consecutive month in December 2012. Cyclical employment is still heading south.

The growth in trend unemployment (drawing on the ABS and DEEWR payments data).

DEEWR Payments - unemployment up - students down

Today, DEEWR released its payment data for August 2012. Looking at those people on New Start Allowance and Youth Allowance (Other) as a proxy for unemployed people on income support, the raw numbers declined a touch in August.

But applying some seasonal adjustment, we can see the number of unemployed persons on payments is still increasing.

Because I applied a slightly different seasonal adjustment compared with previous occasions, I will give you the diagnostic plots so that you can see what I have done. These diagnostics are a little rough and I really only use them as a cross check on the adjustment process.

And a quick comparison with the ABS official count of unemployed persons.

There is one DEEWR payment that is behaving unusually: Youth Allowance (Full Time Students). I am not familiar with this payment policy space, so I am unable to shed much light on why its take up rate has fallen. But the charts are quite dramatic.

The usual caveats apply: The DEEWR payments data are not consistent over time. From time to time the government changes the eligibility requirements for payments. This means series suffer from numerous subtle (and occasionally not so subtle) breaks. At the most extreme, it is possible that conclusions drawn from this data are spurious.

Update:  @DPlunky tweeted: Recent changes in DEEWR pops probably due to teens measure effective 1 January this year. Secondary students aged up to 19 can stay on FTB A; 16 & 17 year olds can't get YA. This reduces YA pop.

Unemployment payments growing

Payments for the unemployed are growing. Yesterday DEEWR released its payments data for July 2012. From June to July 2012, the number of Newstart recipients rose from 580,807 to 586,745 claimants. An increase of almost 6000 claimants or one per cent. The growth in New South Wales, Victoria, Western Australia and Tasmania was at two per cent or higher.

The positive growth in the number of newstart claimants at this time of the year is seasonally unusual. For example, in the next chart compare the period April to July in 2011 with the same period in 2012.

Not surprisingly, if we apply a seasonal decomposition to the DEEWR data, this growth is showing up as growth in the seasonally adjusted series.

If we add together the Youth Allowance Other and New Start Total payments - we have a rough proxy for the number of people who are unemployed. In raw terms, there is some divergence between the trajectory of this rough proxy and the official ABS count in recent months.

Even comparing the ABS seasonally adjusted series and our seasonally adjusted series for DEEWR we can see some divergence in recent months.

I suspect this divergence deserves a "glass half full" explanation. The ABS seasonally adjusted unemployment count jumped up a bit in July and August 2011. The DEEWR payments data is a typically slower to move than the ABS data. It is only now moving back to its long-term average of some 30,000 claimants above the ABS unemployment series.

To put it bluntly, I am not convinced that this recent increase in unemployment payment claimants presages an increase in the official unemployment rate. The official count of unemployment persons may go up in the future, but the latest DEEWR data is not the smoking gun. The DEEWR data is a lag indicator, not a lead indicator.

For completeness, comparing the official ABS trend with the trend of this rough proxy gives us the following. The lag nature of the DEEWR data is clearly evident around the GFC between 2008 and 2010.

The usual caveats apply: The DEEWR payments data is not consistent over time. From time to time the government changes the eligibility requirements for payments. This means the series suffers from numerous subtle (and occasionally not so subtle) series breaks. At the most extreme, it is possible that conclusions drawn from this data series are spurious.

DEEWR unemployment payments growing

It has been a couple of months since I have looked at the DEEWR payments data. While a little rough-and-ready, I have added two series together - Youth Allowance Other and New Start Total Recipients - as a proxy for the number of people who are unemployed.

This compares reasonably well with the ABS count of the number unemployed.

Let's use some seasonal adjustment to get past the seasonality of the data.

What has become clear in the two months since I last looked at this is that the number of people on DEEWR unemployment payments has been growing in recent months.

This growth appears consistent with the ABS trend.

A look at Unemployment Benefit payments

DEEWR publishes monthly data on its payments. The April data was released today.

Based on this advice from Centrelink, it looks like two of these payment data series - Youth Allowance Other and New Start Total Recipients - can be added together and used as a rough proxy for the number of people who are unemployed (noting that the DEEWR payments data suffers from subtle and not so subtle series breaks as the eligibility requirements for payments change over time).

Collectively these series added together look like the following.

These unemployment payment figures compare with the original ABS count of the number of unemployed people as follows. While the series have different seasonal patterns, there is a close relationship between the two.

Applying a seasonal decomposition to the DEEWR data, we get the following trend and seasonally adjusted series. (Note: the decomposition was 'periodic')

Looking at the seasonally adjusted series since September 2011, the number of unemployed persons on DEEWR payments has been rising.

Interestingly, this is quite a different story from the last few months of the unemployed persons data from the ABS.

I am more inclined to favour the payments data over the labour force survey data as the best indicator on what is happening in the labour market.

The trend monthly and annual growth of people on unemployment payments is as follows.

Just for the fun of it, let's look at the most recent bit of that data in detail ... unemployment benefits payments are trending upwards.

Thank-you: to the DEEWR Income Support Information Section for providing me with the payment statistics back to late 2001.