6202.0 - Labour Force, Australia, Feb 2016 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 17/03/2016   
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INSIGHTS FROM THE ORIGINAL DATA


SAMPLE COMPOSITION

The Labour Force Survey sample can be thought of as comprising eight sub-samples (or rotation groups), with each sub-sample remaining in the survey for eight months, and one rotation group "rotating out" each month and being replaced by a new group "rotating in". This sample rotation is important in ensuring that seven-eighths of the sample are common from one month to the next, to ensure that changes in the estimates reflect real changes in the labour market, rather than the sample. In addition, the replacement sample is generally selected from the same geographic areas as the outgoing one, as part of a representative sampling approach.

When considering movements in the original estimates, it is possible to decompose the sample into three components:

  • the matched common sample (survey respondents who responded in both January and February),
  • the unmatched common sample (respondents in February but who did not respond in January, or vice versa), and
  • the incoming rotation group (who replaced respondents who rotated out in January).

The matched common sample made the largest contribution towards the movement in original terms from January 2016 to February 2016 for both employment and not in the labour force estimates. The unmatched common sample made the largest contribution towards the movement in unemployment in original terms. The detailed decomposition of each of these movements is included in the data cube 'Insights From the Original Data'.

In considering the three components of the sample, it is important to remember that the matched common sample describes the change observed for the same respondents between January and February, while the other two components reflect differences between the aggregate labour force status of different groups of people.

While the rotation groups are designed to be representative of the population, the outgoing and incoming rotation groups will almost always have somewhat different characteristics, as a result of the groups representing a sample of different households and people. The design of the survey, including the weighting and estimation processes, ensures that these differences are generally relatively minor and seeks to ensure that differences in characteristics of rotation groups do not affect the representativeness of the survey and its estimates. Monthly estimates are always designed to be representative of their respective months, regardless of the relative contribution of the three components of the sample.


INCOMING ROTATION GROUP

In original terms the rotation group which was new to the sample in February 2016 (the incoming rotation group) displayed a stronger tendency towards both employment and participation than the group it replaced (the outgoing rotation group in January), with a higher employment to population ratio (60.5% for the incoming group, compared to 60.1% for the outgoing group) and a higher participation rate (65.3% for the incoming group, compared to 64.8% for the outgoing group). An increased employment to population ratio was observed across all survey rotation groups, with an average increase of 1.1 percentage points seen for the seven common rotation groups.

The incoming rotation group in February 2016 further displayed a slightly stronger tendency towards unemployment than the group it replaced, with the unemployment rate for the incoming group 7.3%, compared to a rate of 7.2% for the outgoing group and the average of all rotation groups for February 2016 of 6.2%.


OUTGOING ROTATION GROUP

In looking ahead to the March 2016 estimates, the outgoing rotation group in February 2016, which will be replaced by a new incoming rotation group in March 2016, had a lower employment to population ratio (60.5% in February) compared to other rotation groups (61.5% for all rotation groups in February 2016). If the incoming group in March 2016 has an employment to population ratio that is more similar to, or is relatively higher than the average, this rotation group change considered in isolation is likely to contribute towards employment growth. This will be summarised in the March 2016 issue.

The outgoing rotation group in February 2016 also had an unemployment rate (5.9% in February 2016), which was similar to the other rotation groups (6.2% for all rotation groups in February 2016) and a participation rate (64.3% in February 2016), which was lower than the other rotation groups (65.5% in February 2016). If the incoming group in March 2016 has an unemployment rate which is equally similar to the average, there is unlikely to be a significant contribution to the unemployment rate from this rotation group change. Similarly if the incoming group in March 2016 has a participation rate which is more similar to, or is relatively higher than the average, this rotation group change is likely to contribute towards participation growth.


THE IMPORTANCE OF TREND DATA

As the gross flows and rotation group data are presented in original terms they are not directly comparable to the seasonally adjusted and trend data discussed elsewhere in the commentary, and are included to provide additional information for the original data. Since the original data are unadjusted, they have a considerable level of inherent sampling variability, which is specifically adjusted for in the trend series. The trend data provide the best measure of the underlying behaviour of the labour market and are the focus of the commentary in this publication.