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DEEWR’s Monthly Leading Indicator of Employment (Indicator) has fallen for the fifth consecutive month in May 2012. Weaknesses are evident in all of the Indicator’s four components and in particular the Dun and Bradstreet Employment Expectations (which is lagged 12 months). As the Indicator has fallen for fewer than six consecutive months, it is too early to confirm that a slowing in employment growth (to a rate below its long-term trend of 1.7 per cent per annum) is in prospect. In comparison, cyclical employment has fallen for fifteen consecutive months.
Levels of the DEEWR Leading Indicator of Employment and Cyclical Employment
Monthly Changes in Value of Leading Indicator*
| |
Dec 2011 |
Jan 2012 |
Feb 2012 |
Mar 2012 |
Apr 2012 |
May 2012 |
| ∆ Leading Indicator |
0.062 |
-0.009 |
-0.087 |
-0.142 |
-0.163 |
-0.155 |
*monthly changes in standard deviations from the cyclical trend
Components of the Leading Indicator (Short term Trend)**
|
Series |
Percentage Change over the Year |
Percentage Change over the Month |
Weights*** (%) |
Weighted Change over the Month**** |
|
ANZ Newspaper Job Ads
(May 2012 release) |
-18.2% |
-1.7% |
53.1 |
-0.012 |
|
Dun and Bradstreet Employment Expectations (% pt change)
(Year to September Quarter 2011 - May 2012 release) |
-8.1%pts |
-3.1%pts |
24.6 |
-0.122 |
|
Westpac-Melbourne Institute
Leading Index of Economic Activity
(April 2012 release) |
2.2% |
0.2% |
7.4 |
-0.006 |
|
Westpac-Melbourne Institute
Consumer Sentiment Index
(April 2012 release) |
-7.0% |
-0.7% |
14.9 |
-0.015 |
|
∆ Leading Indicator: |
-0.155 |
**Note: The cyclical components of each series, and not the trend percentage changes shown above, contribute to the movements in the Leading Indicator. Data have been trended by DEEWR using the Henderson 13-term centred moving average process. *** The latest revision of the weights in the Indicator occurred in February 2009. **** Components may not sum to the total owing to rounding errors.
Technical Notes
The DEEWR Leading Indicator of Employment is the average of the normalised and standardised cyclical elements of four series which have been shown to lead cyclical employment consistently over a long period. The cyclical components and the composite Indicator for previous months are subject to revision when new statistics are incorporated.
The Leading Indicator is designed to give advance warning of turning points in ‘cyclical employment’ (i.e. the deviation of the one-year trend in employment from the six-year trend). The average lead time of the Indicator over the series (i.e. the time between a peak or trough in the Indicator and the corresponding peak or trough in cyclical employment) is around nine months (or about twelve months if account is taken of the additional 12-month lag in the Dun and Bradstreet Employment Expectations Index), although it has varied over the past decade. For instance, the lead time between the most recent peaks was five months. A ‘turning point’ in the Indicator is said to be confirmed when there are six consecutive monthly movements in the same direction after the turning point. A fall (or rise) in the Indicator does not necessarily mean that the level of employment will immediately fall (or rise). Rather, it implies that after a lag, the growth rate of employment may fall below (or rise above) its six year trend rate of about 1.7 per cent a year.
The Leading Indicator incorporates data lagged one year for the Dun and Bradstreet Employment Expectations series and the most up to date data for other series. This is based on econometric testing which revealed that the Dun and Bradstreet series had a longer lag.
The date of the issue of the DEEWR Leading Indicator of Employment, and the labels for the x-axis of the chart, relate to the month the Indicator is released. The data used to derive the cyclical employment chart line, however, are two months behind the release month for the Leading Indicator.
Release Details
The DEEWR Leading Indicator is available on the Internet at approximately 2.00 pm on the day of its release. The next issue is scheduled for release on Wednesday 6 June 2012.
Contact Officers
Mr Jan Lee/Mr Nick O'Gorman
Economic Analysis, Forecasting and Advice Section,
Department of Education, Employment and Workplace Relations
Ph: (02) 6121 6712 | (02) 6121 8330
Email: leading.indicator@deewr.gov.au