Media still pushing old news about unemployment in Cairns

A piece in today’s Australian (read it here) perpetuates the old news that youth unemployment in Cairns is running at crisis levels. In this case the article quotes Cairns youth unemployment rate at 27.5%. As regular readers will know, this figure would appear to be the “official” 12 month moving average of the unadjusted original ABS data. The article quotes a Treasury document prepared for the Queensland government “late last year” at which time the 12 month moving average youth unemployment rate was about the quoted 27.5% level.

However, this extremely lagged measure of unemployment can be improved upon by utilising the Conus Trend which, at the end of last year, already had Trend Youth unemployment in Cairns down to 14.0%; and has subsequently fallen further still.

The problem with this focus on the 12 month moving average data can be seen clearly when we consider the most recent (March) data. The “official” 12 month moving average number remains elevated at 21.6% (note this is already a sharp decline from the number quoted in The Australian’s article today) but the Conus Trend sits at just 10.2%. With the “official” data still telling us that youth unemployment remains very high in Cairns, it is worth noting that the ABS original data hasn’t had a rate above 17.5% for 6 months and the most recent reading was just 7.3% (the lowest in almost 5 years). The 12 month moving average is simply not responsive enough to changes in the underlying data to allow for sensible decisions and positions to be taken based upon it.

In the past 6 months the original average level of youth unemployment in Cairns is just 12.4%. If nothing significant happens with regard to youth employment in the next six months then by September the Treasury will be reporting youth unemployment in Cairns at just 12.4% and those who believed the “official” numbers will be scratching their heads wondering what on earth happened since March to bring it down so sharply from 21.6%! In fact nothing will have happened during that period; the improvement had already happened but their data hadn’t picked it up.

I fully accept that our Trend estimates are subject to revision and the scale of the improvement seen over recent months may well be exaggerated, and therefore liable to revision, but the fact remains that to suggest that youth unemployment in Cairns is still at crisis levels is simply misleading. 

The Treasury report from the end of 2016 is quoted as saying that “there has been a relatively slow pick-up in labour-market demand” in Cairns. If we are only considering the lagged Treasury 12 month moving average data that may well be true. But since July last year those with an eye on the Conus Trend employment data for Cairns have been well aware of a significant pick-up in jobs which, even as early as the end of last year, had identified almost 8,000 new jobs over the previous 5 months; with another 1,000 added since.

It’s time that the Treasury and media stopped pushing the old, tired news that Cairns is some kind of employment black-hole when the reality proves different. This kind of negative reporting and thinking not only leads to bad policy making but it also negatively impacts sentiment in the region, an impediment to future improvements.

 

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