Posted to The Age (5/3/2012) on 5/3/2012 at 12:44 PM (Not published by Newspaper)
Commenting on "The case for RBA tipsters being wrong – again"
http://www.theage.com.au/business/the-case-for-rba-tipsters-being-wrong--again-20120305-1uc2k.html
The current model used to calculate unemployment rate is unrealistic and unreliable, and should not be taken into consideration for RBA to decide rate changes.
The model is unrealistic because anyone works for one hour paid employment during the survey period is considered employed. If that same person works for 35 one-hour jobs, he is in fact equivalent to a full-time worker, but instead he is counted 35 times.
It is unreliable because seasonally adjusted is not no longer valid. Many people purchase goods when sales are on, including Christmas items after Christmas, summer fashion after summer, etc. The latter is true, because most goods are sourced from China, and there is a two-season difference between China and Australia.
What is more concerning is that when travel expenditure is down, this is a reflection more on air travel. Unfortunately air tickets are made up of two components, the actual cost of ticket and the fuel surcharge. Many airline companies are living in the lah-lah land by slashing the ticket price continuously to an unprofitable level just to attract extra patronage. This price slashing is not to curb inflation, but for survival. It is, therefore incorrect to be used as a determinant variable for RBA.
Commenting on "The case for RBA tipsters being wrong – again"
http://www.theage.com.au/business/the-case-for-rba-tipsters-being-wrong--again-20120305-1uc2k.html
The current model used to calculate unemployment rate is unrealistic and unreliable, and should not be taken into consideration for RBA to decide rate changes.
The model is unrealistic because anyone works for one hour paid employment during the survey period is considered employed. If that same person works for 35 one-hour jobs, he is in fact equivalent to a full-time worker, but instead he is counted 35 times.
It is unreliable because seasonally adjusted is not no longer valid. Many people purchase goods when sales are on, including Christmas items after Christmas, summer fashion after summer, etc. The latter is true, because most goods are sourced from China, and there is a two-season difference between China and Australia.
What is more concerning is that when travel expenditure is down, this is a reflection more on air travel. Unfortunately air tickets are made up of two components, the actual cost of ticket and the fuel surcharge. Many airline companies are living in the lah-lah land by slashing the ticket price continuously to an unprofitable level just to attract extra patronage. This price slashing is not to curb inflation, but for survival. It is, therefore incorrect to be used as a determinant variable for RBA.
