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  • 7/31/2019 A First Look at Australian Unemployment Statistics: A New Methodology for Analyzing Unemployment Data

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    A First Look at Australian Unemployment Rates

    A New Methodology for Analyzing Unemployment Stats

    Courtesy images:http://www.travelnotes.org/Oceania/images/australia_regions.gif

    https://reader009.{domain}/reader009/html5/0429/5ae4a981ed67a/5ae4a98506c3f.jpg https://reader009.{domain}/reader009/html5/0429/5ae4a981ed67a/5ae4a9867492b.jpg

    http://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.travelnotes.org/Oceania/images/australia_regions.gifhttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://resources3.news.com.au/images/2012/02/26/1226282/095447-australia-politics-gillard.jpghttp://www.sydney-australia.biz/western-australia/graphics/western-australia-kangaroo-beach.jpghttp://www.travelnotes.org/Oceania/images/australia_regions.gif
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    Table of Contents

    No. Topic Page No.

    1. Abstract 3

    2. Brief Introduction to Analysis 4

    3. Unemployment Diagrams 9

    4. Unemployment rate of 6% in 2013: Implications 15

    5. Summary and Conclusions 17

    6. Appendix 1: Compilation of some news items 18

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    1. Abstract

    There has been a significant improvement in the Australian economy, especially

    the unemployment situation (which is the focus here), between 2011 and 2012, as

    revealed by an analysis of the unemployment data, using a new methodology, as

    described here.

    Instead of the exclusive focus on the unemployment rate y/x, the focus here is on

    the nature of the underlying x-y relation where x is the labor force and y the

    number of unemployed.

    As with the earlier analysis for the USA (for the period 1941-2012), a simple linearlaw y = hx + c relates the two variables of interest. As the labor force x increases

    (or decreases), the unemployment levels y will also increase or decrease, following

    this simple linear law. However, the unemployment rate y/x = h + (c/x) can either

    increase or decrease depending on the numerical values of the constants h and c

    (which can be either positive or negative).

    The significant improvement in the Australian unemployment situation, between

    2011 and 2012, can be appreciated by the fact that h > 1 in 2011 but has now

    decreased to h 0.20 in 2012. The number of unemployed y is, therefore, growing

    at a lower rate in 2012, compared to 2011, with increase in the labor force.

    NOTE: More than 100 hits had been recorded after posting, in the first hour

    or so, prompting this clarification. I found an unfortunate numerical error in

    the PREVIOUS version, in Table 1. I had converted unemployed to millions

    and added this to the employed before converting it also to millions. This

    affects the labor force values. All graphs and Table 1 have been updated in

    this revision. The slope calculations were obviously affected by the numerical

    error and have also been fixed. Sorry, folks. I have been much too busy with

    several of these articles and, sometimes, mistakes are made. This is the first

    one that I discovered after posting. It was bugging me why I got 5.4% for

    unemployment rate for June 2012 instead of 5.2% (news media, or 5.1% as

    quoted on the ABS website).

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    2. Brief Introduction to Analysis

    Australias unemployment rate rose to 5.2% according to the most recent monthly

    data for June 2012, seehttp://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/.

    Some economists have already warned that the unemployment rate could exceed

    6% in 2013 (see links to news items complied at the end of this article). Retiring

    baby boomers and youth who choose to stay in school longer are masking the more

    grim unemployment outlook.

    The unemployment rate is the ratio y/x, converted to a percentage, where the

    numerator y is the number of unemployed workers and the denominator x is the

    total labor force, the sum of the employed plus the unemployed. The data is

    obtained from various surveys, conducted monthly, and then extrapolated to the

    larger population, see website of Australian Bureau of Statistics, link given above

    for the June news release. The monthly data, from January 2011 to June 2012 has

    been compiled in Table 1 and will be analyzed here briefly.

    Notice that the labor force x has increased between Jan 2011 and June 2012, see

    Figure 1. The unemployment rate, y/x, on the other hand has been going up and

    down and revealed a pronounced peak, as seen in Figure 2. An expanded scale isused in both figures to reveal these trends. As discussed in two recent articles (see

    links below) which discuss the high US unemployment rate during the Obama

    years and how it compares with other periods of high US unemployment rates

    (from 1941-2011), the focus has always been on the ratio y/x. The relation between

    the labor force x and the number of unemployed y has generally not been

    investigated and tells a very different story.

    1. http://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-

    happened-in-the-Obama-years Published July 10, 2012.2. http://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-

    Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levels

    Published July 12, 2012.

    http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/http://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99857981/The-Highest-US-Unemployment-Rates-Obama-years-compared-with-historic-highs-in-Unemployment-levelshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.scribd.com/doc/99647215/The-US-Unemployment-Rate-What-happened-in-the-Obama-yearshttp://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0/
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    12.020

    12.040

    12.060

    12.080

    12.100

    12.120

    12.140

    12.160

    0 3 6 9 12 15 18 21

    580

    590

    600

    610

    620

    630

    640

    650

    0 3 6 9 12 15 18 21

    Time t [months]

    Laborforce,x[millio

    ns]

    Time t [months]

    Unemployed,y[in000s]

    Oct 11

    Oct 11

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    Figure 1 (Top): Australian labor force x plotted as a function time t expressed in

    months, with Jan 2011 being taken as month number 1. More than one value can

    be obtained for any given month because of revisions being made for prior month.

    Some of these are included here in this plot (vertical line at same month number).

    Figure 2 (Middle): Australian unemployment level y, plotted as a function time t

    expressed in months. The Oct 2011 peak in the unemployed y coincides with a

    local maximum in the labor force x.

    Figure 3 (Bottom): Australian unemployment rate plotted as a function time t

    expressed in months. The maximum in the unemployed y in Oct 11 coincides with

    the maximum in the unemployment rate, also observed in October 2011.

    4.7

    4.8

    4.9

    5.0

    5.1

    5.2

    5.3

    5.4

    0 3 6 9 12 15 18 21

    Time t [months]

    Unemploy

    mentrate,y/x[perce

    nt]

    Oct 11

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    For example, for th

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