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

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 in September and October, 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 incoming rotation group in October 2019 had a higher employment to population ratio than the group it replaced (63.0% in October 2019, compared to 61.7% in September 2019), and was higher than the sample as a whole (62.4%). The incoming rotation group had a higher full-time employment to population ratio than the group it replaced (42.8% in October 2019, compared to 41.9% in September 2019), and was higher than the sample as a whole (42.5%).

The unemployment rate of the incoming rotation group was lower than the group it replaced (5.3% in October 2019, compared to 5.4% in September 2019) and was higher than the sample as a whole (5.1%). The participation rate of the incoming rotation group was higher than the group it replaced (66.4% in October 2019, compared to 65.2% in September 2019) and higher than the sample as a whole (65.7%).

OUTGOING ROTATION GROUP

In looking ahead to the November 2019 estimates, in original terms, the outgoing rotation group in October 2019, that will be replaced by a new incoming rotation group in November 2019, had a higher employment to population ratio (63.2% in October 2019) compared to the sample as a whole (62.4%). The outgoing rotation group in October 2019 had a higher full-time employment to population ratio (43.8%) than the sample as a whole (42.5%).

The outgoing rotation group had a lower unemployment rate in October 2019 (4.8%) compared to the sample as a whole (5.1%). The participation rate of the outgoing rotation group in October 2019 (66.4%) was higher than the sample as a whole (65.7%).

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 provides the best measure of the underlying behaviour of the labour market and is the focus of the commentary in this publication.

ROTATION GROUP ANALYSIS FOR STATES AND TERRITORIES

In addition to analysis across the entire sample, the ABS also undertakes similar analysis for the responding sample in each state and territory each month, and highlights where there is a notable change for users to be aware of. For example, in October 2019, the incoming rotation group in Victoria was more employed and less likely to be not in the labour force than the group it replaced, and was generally more employed and less not in the labour force than the matched sample. As with any notable month-to-month movement of this nature in state and territory estimates, the ABS recommends exercising a degree of caution in interpreting short-term changes.

As for its reporting for the entire sample, where the ABS has not highlighted a notable incoming rotation group effect, any larger changes should therefore be considered to reflect a broader change across the sample.