Australia’s gyrating jobs figures are making it harder for the central bank and investors to gauge the impact of record-low interest rates on the nation’s economy.

The number of people employed fell by 29,700 last month after rising 32,100 in August, the statistics bureau said in Sydney today. It yesterday announced a review of methodology designed to smooth seasonal factors that produced a record 121,000 increase in jobs in August and would’ve shown a 172,000 loss in September.

“The admission of statistical discrepancies has essentially muddied the state of the labor market,” said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia in Sydney. “Not only does it make it difficult for investors and analysts to get a clearer picture of employment growth, but it will result in Reserve Bank policy makers being more cautious when it comes to interest-rate decisions.”

The lack of labor market clarity complicates the central bank’s task of using a 2.5 percent cash rate to guide the economy toward domestically-driven growth that soaks up unemployed miners as a resource boom fades.

The bureau said today that in recent months key labor figures have shown “unusual volatility” and an investigation of the August data had identified “no systematic cause.” For the September numbers, the bureau found none of the previously observed seasonal movements, leading it to conclude that the adjustments made in the past weren’t appropriate for July, August and September. Instead, it opted to use raw numbers.

Current Investigation

It said the treatment of October data and future months “will depend on the estimates produced, the continuation of the current investigations and the outcome of the review.”

With the ABS to decide month by month how to treat its labor force survey results, financial markets and economists are “blind to any dramatic developments that genuinely occur in the real economy,” said Ben Jarman, a Sydney-based economist at JPMorgan Chase & Co. “With uncertainty around the labor survey dragging on, the hurdle rises for a change in the RBA cash rate.”

The Australian dollar fell immediately after the report before rebounding to trade at 88.57 U.S. cents at 1:48 p.m. in Sydney from 88.27 cents before the release. Traders are pricing in 2 basis points of reductions in the cash rate over the next 12 months, compared with 2 basis points of increases yesterday, according to an index of swaps from Credit Suisse Group AG.

The Reserve Bank of Australia has flagged a period of rates stability after reducing the benchmark to 2.5 percent last year as it seeks to avoid a growth gap emerging.

Unusually Volatile

“Labor market data have been unusually volatile of late,” RBA Governor Glenn Stevens said in a statement two days ago after leaving rates unchanged for a 14th month. “The bank’s assessment remains that although some forward indicators of employment have been firming this year, the labor market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently.”

Today’s report showed unemployment rose to 6.1 percent last month from 6 percent in August as the number of full-time jobs increased by 21,600, while part-time employment fell by 51,300. The participation rate, a measure of the labor force in proportion to the population, fell to 64.5 percent in September from 64.7 percent, the report showed.

One of Australia’s most important economic releases “now borders on being meaningless,” UBS AG Australian economist Scott Haslem said. “Further questioning the credibility in this data is the fact that the over the past three months, hours-worked in the economy fell at an annualised pace of more than 8 percent.”

Source: Bloomberg News