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MNI PODCAST: FedSpeak: No October Surprises Despite Hot CPI
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China’s central bank needs to further lower policy rates while committing to a 2% inflation target, in order to drive down real interest rates, reverse low price expectations, and counter weak domestic demand, a prominent policy advisor told MNI in an interview.
Amid the current shortfall in domestic demand, the primary objective of monetary policy should be lowering real interest rates to stimulate private sector investment, which requires both reducing financing costs and lifting inflation expectations, said Zhang Bin, deputy director at Institute of World Economics and Politics at the Chinese Academy of Social Sciences.
The recent pickup in producer price inflation is largely tied to energy and upstream supply chains, such as for integrated circuits and semiconductors, but consumer price inflation remains subdued at around 1%, a situation likely to persist without additional policy support, he said, adding that the low rate of increase in prices is also depressing expected returns for household home purchases and on corporate capital expenditure.
"To generate endogenous growth momentum, a decline in real interest rates cannot be avoided," Zhang said. The People’s Bank of China must make a firmer commitment to a future inflation path and strive to hit the 2% inflation target if it is to guide price signals and expectations more conducive to corporate investment and home purchases, he said. (See MNI INTERVIEW2: China Needs Monetary Easing To Boost Growth)
His comments come as other advisors and economists have told MNI that the PBOC is likely to hold its policy rate unchanged over the rest of the year, though it could still reduce banks’ reserve requirements, amid concerns that any broad easing could undermine the drive towards economic restructuring and boost bubbles in areas like AI. (See MNI: PBOC Seen Holding Rates, But Reserve Ratio Cut Possible)
YUAN
Nominal rate cuts must outpace the drop in inflation expectations to stimulate private sector spending, said Zhang, pointing to the property sector as an example. If people anticipate that rents will stagnate, few will buy real estate, he noted.
Weak domestic demand has also weighed on the pace of yuan appreciation. From 2005 to 2019, the yuan appreciated by an average of 3% annually, but in recent years, neither the yuan nor its real effective exchange rate has shown substantial appreciation, while nominal effective exchange rate gains have also been modest, Zhang said, noting that market participants are reluctant to hold yuan-denominated assets in an environment of deficient domestic demand and depressed corporate profitability.
"If China emerges from weak domestic demand and the yuan returns to its historic track, the currency could appreciate at an annual rate of 3%,” he said.
More than 85% of the slowdown in consumption growth can be traced to sluggish nominal GDP growth, which has slowed growth disposable income, Zhang mentioned
For several years, the nominal GDP deflator has lingered around -1%. Under a reasonable level of aggregate demand, the deflator would rebound from -1% to 2%, adding three percentage points to nominal GDP growth. If prices were to rise by three percentage points and real output were to expand by 1.5 percentage points, nominal GDP growth could accelerate by 4.5 percentage points, Zhang said.
Addressing concerns that rate cuts would further compress commercial banks' net interest margins, he pointed out that lower interest rates could help lenders improve asset quality and reduce non-performing loan ratios.
Oct-27 10:05
China needs to expand public investment in order to boost consumption and support employment, a prominent policy advisor said, arguing that broad fiscal spending should grow faster than the economy-wide average if the country is to break free from a negative spiral of contracting expenditure.
Calls for China to rebalance its economy often focus on moves to boost consumption, enhance social welfare, and assist lower-income groups, but these steps alone are not enough to resolve the broader shortfall in aggregate demand, said Zhang Bin, deputy director at Institute of World Economics and Politics at the Chinese Academy of Social Sciences.
While China’s export- and AI-related sectors remain buoyant, negative growth in broad fiscal spending has been a major drag, intensifying downward pressure on demand in the second and third quarters, Zhang noted, warning of a self-reinforcing cycle in the absence of decisive intervention by the government.
Investment was long the cornerstone of the economy, but manufacturing, real estate, and infrastructure investment are all experiencing downward pressure, he said.
"Expanding domestic demand not only bears on employment expectations, but also affects income distribution and external relations,” he said, referring to international discomfort over China’s reliance on exports.
Broad fiscal spending growth must outpace average economy-wide expenditure to achieve a genuine counter-cyclical effect, whereas from 2022 to 2025, broad fiscal spending lagged economy-wide spending growth by an average of 1.8 percentage points, Zhang said in an interview.
“Over the past two years, shifts in the pace of fiscal spending have been the primary driver of China's economic fluctuations,” he said.
To support demand, a nominal output gap estimated at around CNY6.3 trillion must be addressed, he said, noting that if this gap were to be filled entirely through consumption, consumption would need to grow by an additional 11.3%, versus actual growth of retail sales of only 1.1% y/y in the first nine months of 2026. （See MNI INTERVIEW 2: China's Econ Restructure Needs More Support）
Substantial public investment could swiftly repair corporate and household balance sheets, bolstering earnings and household incomes, Zhang noted.
"Consumption and investment are never zero-sum trade-offs, and investment leads consumption,” he said. “If forced to choose, public investment is both more urgent and more critical in expanding domestic demand in the short term.”
Zhang still sees massive room for public investment, including the "six networks," particularly data centres and underground utility tunnels. More than 100 million migrant workers are unable to settle in cities for lack of housing, public infrastructure, and supporting amenities, while a vast array of existing assets also requires regular maintenance and renewal, he added, mentioning that these activities account for 70% to 80% of total investment in developed economies.
FISCAL SPENDING
Broad fiscal spending, including general public budget and government-managed funds, trended downward for 13 consecutive months from July 2025 to September 2026, the second-longest contractionary streak in the past decade, trailing only the March 2022 to July 2023 period when local government debt oversight was tightened, Ministry of Finance data shows.
The MOF disclosed last week that general public budget expenditure rose 1.0% y/y in the first nine months of this year to about CNY21.0 trillion, well below the 4.4% growth targeted in the 2026 budget. Zhang noted that broad fiscal spending fell 3.5% y/y in the period, adding that had fiscal expenditure kept pace with average economy-wide spending growth, it would have finished Q3 about CNY1.6 trillion higher. (See MNI: Advisors See New Bond Quotas To Bolster China Growth)
EMPLOYMENT
China’s labour market remains under pressure, Zhang said, pointing to PMI employment sub-indices showing contractions in construction and consumer services.
Even though capital-intensive, high-tech AI investment generates less employment than traditional public works, public investment projects can still deliver immediate and tangible job gains, he said.
The surveyed urban unemployment rate for the 16–24 age group, excluding students, stood at 18.0% in September 2026, compared with the headline national urban rate of 5.2%, according to the NBS.
China can tolerate a moderate slowdown in headline GDP growth whilst it restructures its economy, but achieving full employment remains non-negotiable, Zhang said. Next year’s GDP growth target is likely to be set around 4.5%, he said.
Oct-27 10:05
Reports by Bank of Japan branch managers that some smaller firms are already postponing capital investment plans under the impact of tighter monetary policy are adding to officials’ concerns about how much further they can raise the policy rate, MNI understands.
September’s 25-basis-point hike to 1.25%, combined with economic uncertainty, has already had an impact on smaller firms, according to the quarterly branch managers’ meeting, which also pointed to the effect on real estate firms. Officials think the accumulated impact of past hikes could emerge quite suddenly, dampening inflation and output, though they see the risk of a sharp downturn as small.
These concerns have emerged as the BOJ weighs whether the additional 25bp hike widely expected for December might be better postponed until January’s meeting, unless upside risks to prices strengthen. A decision to hold off the increase until the new year could imply that the tightening cycle would be more likely to be capped at 1.75% rather than 2%.
DECEMBER TANKAN
The direction of corporate inflation expectations in the December Tankan survey will be another key factor in the decision over whether another hike is coming this year, with particular attention given to the inflation views for three and five years ahead. (See MNI POLICY: Corp Expectations Data Key For Dec BOJ Decision)
For the moment, short-term rates remain negative in real terms, mitigating the effects of tightening so far, but bank officials are monitoring companies’ “hurdle rates”, the minimum rate of return they must earn on an investment to justify the risk and cost of capital and how this compares to funding costs.
Firms’ judgements as to the extent to which they are still able to raise prices to compensate for higher funding costs is also key.
Reports so far of postponed investments also have to be further analysed for their significance, with more information to be gleaned from the December Tankan survey results on firms’ financial positions and lending by financial institutions.
Officials at the BOJ’s headquarters are asking bank branches to gather evolving business plans on a real-time basis.
Oct-27 07:57
The Federal Reserve will continue to tighten monetary policy in due time, in part because AI-related spending is raising the neutral rate of interest, the former director of the Fed Board's division of monetary affairs William English told MNI.
The Fed will likely leave interest rates in a 3.75% to 4% range this week, English said, while Chairman Kevin Warsh will be asked to explain the pause amid elevated inflation. English expects a rate hike at the FOMC's December meeting and early next year.
"Monetary policy a little tighter along the way, but not a lot," he said. "That'll be enough to keep output near potential, keep employment near the natural rate, and inflation will gradually come down because expectations have stayed pretty well-anchored out a few years and so that will pull inflation down to those expectations."
That "may take a couple of years but I think we get there," he added about inflation.
HIGHER NEUTRAL
RISKS
Still, there are numerous risks to the medium-term outlook. There is the threat of a longer-lasting conflict with Iran that could pressure energy costs and inflation. But there is also the chance that a continuing Middle East conflict could cause consumers to pull back spending and save more amid the uncertainty, said English, now at Yale University.
The Federal Reserve is set to hold interest rates steady Wednesday after officials signaled they are not in a rush to tighten and will wait to see whether demand softens in the face of rising costs and supply-side pressures ease.
Economic activity has strengthened in recent months, providing the FOMC with a flexible buffer to evaluate incoming data and confirm whether price growth is accelerating before taking further action. Tightening among other major central banks should also create some spillover to U.S. financial conditions, helping to tame domestic price pressures. (See MNI POLICY: Fed In No Hurry But Committed To Taming Inflation)
Fed Chairman Kevin Warsh said Oct. 16 just ahead of the communications quiet period that the economy had "broadly conformed" to expectations since September.
A hold decision could draw dissents from regional Fed presidents who have argued for quicker adjustments. The Middle East conflict continues to put pressure on inflation, and the AI build-out is keeping the economy operating close to capacity. The Fed's preferred inflation gauge is expected to have accelerated a tenth to 3.7% in October, with core PCE inflation steady at 3.1%, according to the Cleveland Fed's nowcast. (See MNI INTERVIEW: Services Prices Show No Sign of Slowing - ISM)
Former Fed officials expect the Fed to resume tightening in December and again in the first quarter of next year, and markets are fully priced for at least two more hikes by spring. (See MNI INTERVIEW: Lockhart Sees Next Fed Hikes in Dec, Q1)
AI BOOM
The AI investment boom has unexpectedly emerged as the predominant inflation risk for the Fed by fueling massive demand for resources that could last years before productivity gains expand supply. (See MNI POLICY: AI Buildout Emerges As Top Inflation Risk For Fed)
Taylor rules would call for a fed funds rate of 4.5-5% to make monetary policy restrictive enough to bring down inflation, former Richmond Fed President Jeffrey Lacker told MNI. (See MNI INTERVIEW: Fed Rate Must Near 5% To Tame Inflation-Lacker)
That’s partly because rapid economic growth and strong investment demand are lifting the neutral rate of interest, making current monetary policy relatively more accommodative and forcing the Fed to raise rates simply to maintain a restrictive stance.
If markets begin expecting a permanently higher rate of productivity growth from AI, the longer-run neutral rate also rises. The Fed would then need to hold rates higher over the long term rather than rely on productivity as a disinflationary tailwind.
FRAMEWORK CHANGES
Meanwhile, Warsh continues to lay the groundwork for regime change at the central bank, though the most profound shifts are months away and unlikely to shape the current course of monetary policy.
His external task force on productivity will conduct a field hearing in California next month.
A foundational reassessment of the inflation framework and the optimal policy implementation framework, based on recommendations from two other task forces, will be thoroughly debated next year, and any changes would be implemented only once inflation is back near target and the Fed's portfolio contains a larger share of Treasury bills. (See MNI POLICY: Warsh Regime Change Strategy Starts To Reshape Fed)
Oct-26 17:39
Annual Survey of Hourly Earnings data suggest the recommended increase in the UK’s minimum wage to be announced by the Low Pay Commission alongside Wednesday's budget could well be over 4%, markedly higher than previously expected, Nye Cominetti, principal economist at think-tank the Resolution Foundation, told MNI.
The Low Pay Commission, a government advisory body, applies a benchmark of two-thirds of median hourly earnings for the National Living Wage, but also takes into account the state of the labour market. ASHE data published on Oct 22 showed median earnings up 5.8% on the year in 2025/26, but Cominetti expects the LPC to be cautious when it announces the wage increase effective from April 2027.
Though the ASHE data were published very close to the Oct 28 budget, he said the LPC would have had time to factor them in.
"They get their data earlier than the rest of us. One or two weeks to look at it. So they would have had all of that ASHE data when they would have been doing their deliberation ...and it probably would have been last week that they sent their minimum wage recommendation to the government," he said.
The LPC's earlier assessment in the spring for the NLW increase was 3.7%, and Cominetti said the Commission was likely to be restrained in its upward adjustment.
"They should not follow that ASHE number all the way up to a big five-point-something increase, and they should probably stick closer to what they announced," he said.
BANK OF ENGLAND
For the Bank of England the scale of the minimum wage rise will matter, but it is unlikely to have a big impact on the inflation outlook.
"There is a pass through to prices ... but minimum wage workers are a small enough component of aggregate cost inputs that the effect on CPI is never that big," Cominetti said.
Although the LPC has an explicit target for the minimum wage as a share of average earnings they can use concerns over the labour market to override this.
"I'd expect them more to lean on the other parts of the remit, which do say 'please, take seriously any employment effects and look hard at the state of the labour market'," Cominetti said.
There are widespread worries about the UK labour market, which has been described as sliding into low-hire, low-fire mode with high youth unemployment. (See MNI INTERVIEW: Caution Needed On UK Minimum Wage Hikes - IFS)
But studies around the world have found little, if any, provable impact on employment from changes to minimum wages, noted Cominetti, adding that hiring and firing is also affected by multiple other factors, including payroll taxes, which were increased in the October 2024 budget.
"Many of those studies relate to lower minimum wages, and none of them can tell us literally what is happening right now in the UK," he said. "It's not irrelevant that we had labour costs going up as a result of a tax change two years ago.”
Asked for his best guess on what the LPC will recommend, Cominetti said: "I'd expect it to be slightly higher than they said in the spring" because of stronger wage data and because of higher wage expectations. "If I had to put money on it... I'd probably go for something in the low fours.”
Oct-26 15:59
(Repeats story first published Friday.)
Bank of Canada Governor Tiff Macklem is considering delivering the first interest rate increase in over three years, boosting market bets on a move this week with his concern that higher global energy prices are now a bigger threat to the 2% inflation target than sagging exports and investment.
Thirteen of 23 economists surveyed by MNI see a quarter-point rise in the 2.25% overnight lending rate at a decision due Wednesday at 9:45 EST. Before Macklem’s Oct. 17 comments from IMF meetings in Bangkok most economists saw the Bank on hold, even as the last decision mentioned stronger inflation risk.
The Governor referred to global instability including the continued Iran conflict, moving away from an earlier view he could look through a narrow one-off jump in energy prices. Macklem told MNI last month he faced tough choices in looking at prices versus signs of a rebound from U.S. tariffs, but in the end the inflation goal comes first. (MNI INTERVIEW: Macklem-BOC Faces Tough Calls Ahead On Rates)
Consumer prices advanced 3.1% in September, the fourth time in five months it was at the top of the Bank's 1% to 3% target band. While core measures remained near 2%, the Bank's quarterly business and consumer surveys published the same day as CPI showed a boost in long-term price expectations, eroding one of Macklem's prior arguments for patience.
CONSECUTIVE HIKE SIGNAL?
The decision may also return to statements Macklem gave earlier this year that consecutive hikes could be needed if price stability was threatened. Canada's policy rate is also half a point below what officials deem neutral and some investors forecast that two or three hikes are needed to show inflation-fighting credentials.
An increase would be the Bank’s first since July 2023 when the policy rate went to 5%. Officials cut rates four times last year as U.S. tariffs were imposed. With the Federal Reserve and the ECB turning to, hikes the Bank's rate is now far below the federal funds rate of 3.75%-4%. That exposes a potential new source of inflation if Canada's dollar weakens and makes imports more expensive.
New inflation forecasts in the Bank's quarterly outlook will get a big upgrade, Macklem says, and the new view of price gains over the Bank’s two-year horizon will give investors clues on the policy path as well. In July, the Bank said inflation would be 2.2% this quarter and 2.1% in 2027. With the Bank focused on inflation persistence any changes to the 2028 forecast for 2% inflation could also offer guidance.
Resilient growth as the U.S. escalates the tariff war means Canada’s upside risks run beyond inflation. While GDP could slow to 1% annualized in the fourth quarter following another round of tariffs, the Bank's latest business survey indicated firms believe Donald Trump will soften his trade stance.
NUDGE THE PATH
Fiscal policy is also taking a bigger role sustaining companies hurt by geopolitics, and Canada's status as an oil and gas exporter provides another lift. Mark Carney's budget due Nov. 5 is on track for major deficit spending on the military, infrastructure and subsidies for makers of steel, aluminum and autos.
Still, big bets on what officials will do in tricky moments have been a set-up for disappointment, and meeting minutes have shown Governing Council members at times have been divided on the inflation path. The Bank's decisions also bucked market consensus five times in 2022 and 2023 coming out of the pandemic.
“The question we're going to be asking ourselves is: is inflation likely to come back down towards our target on its own, or are we going to have to raise interest rates to influence the path, nudge the path for inflation back towards the target?” Macklem told reporters from IMF meetings in Bangkok.
Oct-26 13:10
The Federal Reserve is likely to resume tightening in December and again in the first quarter of next year so long as inflation remain elevated within a persistent band, former Federal Reserve Bank of Atlanta President Dennis Lockhart told MNI.
“One hike in December and one in the first quarter of next year is a reasonable working assumption,” Lockhart said in an interview.
That the October FOMC meeting takes place less than a week before the midterm elections is not a stated rationale for staying on hold this week, but some on the committee would likely prefer not to act on the eve of a major election, he said.
“I don’t think this amounts to politicization of the decision process. I just think it’s an instinct not to borrow trouble unnecessarily.”
Conditions also allow a skip, Lockhart said. Inflation is elevated but range-bound, with no recent breakout in either direction and no absolute urgency to act. The steepening of the yield curve is also “likely doing some of the committee’s work for it,” buying officials time to see whether demand softens in rate-sensitive sectors and supply-side pressures ease, he said.
STICKINESS
Lockhart identified second- and third-order effects of higher oil prices as a conspicuous driver of inflation. If reports that the U.S. and Israel plan to strike Iran after the midterms prove true, oil and refined product prices are likely to rise again, he added.
Strong employment and robust consumer demand, which give price-setters room to try to widen margins, along with constrained housing supply, are also contributing to inflationary pressures, as is demand associated with AI-related investment, he said. Overall, “prices are more likely to rise than they are to fall.”
Lockhart pushed back on the view held by some FOMC members that energy-driven price pressures will soon prove transitory and disinflation resume. Sticky high costs passing through corporate supply chains are likely to sustain price levels, even if the measured inflation rate stabilizes, he said.
"Some policymakers have been predicting for several months that particularly energy-related cost pressures would prove transitory. How long do you keep predicting this outcome and betting on it from a policymaking point of view?" Lockhart said. "I'd be more inclined to be cautious and bet on stickiness.”
An upside breakout in inflation, which typically requires more than one month’s data to be convincing, would call for a faster response, he added. Worsening inflation expectations could also trigger action, a risk to which the committee is highly sensitive.
AI BOOM
Fed Chairman Kevin Warsh proclaimed this month that AI will fundamentally change the conduct of monetary policy around the world. Lockhart agreed that productivity gains from the technology will increasingly become a consideration.
He said policymakers will consider its effects in conjunction with other accelerants along with drags like fiscal strain, labor shortages and supply constraints--always with the dual mandate in focus. (See MNI POLICY: AI Buildout Emerges As Top Inflation Risk For Fed)
"The committee will assess the economy holistically and want to see AI-driven gains in the data before singling out AI effects in forecasts" he said.
So far, surveys show AI adding more to corporate costs than to productivity, and some analysts expect gains to accrue gradually. Warsh's external task force on productivity and jobs is set to hold a hearing next month.
The chairman appears attentive to real-time data and inputs from corporate executives, Lockhart noted.
Reliance on rear view mirror government data along with a reluctance to act on a single month’s reading--which Lockhart called the right approach--can leave the committee unavoidably behind the curve in some instances, he said. Getting high-value information closer to the moment of decision-making, from private-sector data or improvements to government data, would be helpful, he said.
"When you add it all up, it's still not a perfect snapshot of the economy at any given time, nor is it necessarily reliably predictive. That's just the nature of the uncertainty cloud that policymakers have to operate in. But improvements can be made."
Oct-26 12:49
China's Panda and offshore renminbi bond markets, which saw issuance surge 68% and 46% year-on-year in the first half of 2026, are likely to sustain rapid growth for several years, driven by lower Chinese borrowing costs and growing interest from overseas issuers, a government advisor told MNI.
The nearly 300 basis points interest-rate differential between China and the U.S. remains the strongest incentive for foreign borrowers to tap renminbi-denominated debt markets, Ma Jun, chair of the Green Finance Committee (GFC) of the China Society for Finance and Banking, told MNI on the sidelines of the Financial Street Forum in Beijing. "I think it will continue, not just in the short term, but in the medium term as well," said Ma, former chief economist at the People's Bank of China, adding that the recent strong growth could be sustained "for quite a few years."
MNI reported recently that Brazil is about to take another step towards its first issuance of Panda bonds – renminbi-denominated debt issued by foreign entities in mainland China – before the end of the year. (See MNI EM POLICY: Brazil's China Rating To Pave Way For Panda Bonds). Dim Sum bonds are issued in the offshore renminbi market, predominantly in Hong Kong.
Beyond the cyclical interest-rate advantage, Ma said that the increase in promotion of the two markets was attracting prospective borrowers that had previously been unaware of the financing options available in China and Hong Kong. Recent conversations with banks across Central Asia showed a general lack of knowledge about Panda bonds, he said, noting the region represented substantial untapped potential, particularly in emerging markets.
Further simplification of issuance procedures and lower costs for obtaining green or sustainability labels could also support market growth, he continued, adding standardisation across jurisdictions would help reduce the complexity and expense of issuing bonds.
Offshore renminbi bond issuance reached approximately CNY820 billion (USD115 billion) by mid-to-late June 2026, up 46.8% from a year earlier, according to S&P Global. The outstanding market was estimated at between CNY2 trillion and CNY2.3 trillion. Meanwhile, Panda bond issuance in mainland China jumped 68% year-on-year to around CNY160 billion in the first half of 2026, according to S&P Global, with outstanding bonds exceeding CNY500 billion for the first time in July.
MULTILATERAL BANKS
Ma also expects multilateral development banks to play a greater role in helping developing-country borrowers access China's domestic bond market, where investors generally favour highly rated securities.
He drew a distinction between the two renminbi bond markets, noting offshore Dim Sum investors have a broader range of risk appetites, reducing the need for credit guarantees. By contrast, mainland Panda bond investors typically seek highly rated issuers, making credit enhancement important for developing-country borrowers with weaker credit profiles.
"That's why the guarantee is becoming important for some of the developing countries," he added. Ma cited recent guarantees involving the Asian Infrastructure Investment Bank and Asian Development Bank in connection with Pakistan's Panda bond issuance as examples of how multilateral lenders could help emerging-market borrowers access renminbi financing. Ma expects more such transactions and potentially broader participation from other multilateral development banks, including the New Development Bank.
Oct-26 03:25
Australia’s labour market is showing clear signs of loosening despite some additional uncertainty in the February and August data following changes to the Australian Bureau of Statistics’ collection methodology, an ABS official told MNI.
The unemployment rate rose 10 basis points to 4.7% in September, while other indicators point to jobseekers taking longer to find work, said Sean Crick, head of labour statistics at the ABS.
"We ask some questions about how long someone has been unemployed for, or how long they've been looking for, and we're seeing more people in that one-to-12 month time frame rather than the one-month time frame, which indicates a bit of labour market softening,” Crick added.
The ABS is also seeing people remain unemployed for longer, while the participation rate edged lower in September, he added. These developments reinforced the broader picture of a softening labour market, which the Bureau’s methodological changes would not materially alter, he noted.
While he admitted the Bureau's recent labour data collection upgrades injected extra noise, particularly into the August results that had continued into September, this did not detract from the broader message coming through the numbers, he argued. (See MNI INTERVIEW: RBA Hike Risk Remains, Despite Jobs Data)
DATA UPGRADES
The ABS began modernising its Labour Force Survey in April, completing the changes in August. The upgrades allow respondents to complete the survey on mobile phones, improve the security and efficiency of the underlying infrastructure, and streamline questions on supplementary topics such as employment characteristics, casual work experience and barriers to employment.
The changes form part of an ongoing effort to ensure the survey, which has been running since 1960, reflects the modern labour market and how people interact with government services.
Crick noted the main effect on the seasonally-adjusted data is confined to February and August, when the old model included additional questions on supplementary topics. The ABS found these questions could influence how respondents answered the survey as a whole, potentially affecting whether they were classified as employed or unemployed.
Under the previous methodology, the Bureau adjusted for these effects before applying seasonal adjustments, Crick explained. "The new model no longer requires those adjustments, but removing them makes it harder to distinguish any residual seasonal patterns in February and August."
Crick said the resulting uncertainty was small and would not undermine the broader labour market signals. While the ABS could not quantify the additional variability precisely, it expected it to remain below the usual standard errors associated with its labour force estimates.
The Bureau flagged the potential for additional noise when it released the August data to ensure users understood the limitations, he said, but stressed that the changes would have little effect on the overall interpretation of labour market conditions, pointing to comments made this week by Deputy Governor Andrew Hauser on the softening labour market.
Oct-26 00:37About
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