Monthly Leading Indicator of Employment

Under Embargo until 2pm Wednesday 12February2014

Monthly Leading indicator of employment

FEBRUARY2014

RESULTS

The Department of Employment’s MonthlyLeading Indicator of Employment(Indicator) has fallenin February 2014 for the fourth consecutive month.It is still too early to tell whether employment willcontinue to grow more slowly than its long-term trend rate of 1.1 per cent per annum over coming months. Cyclical employmenthas now fallen for nine consecutive months.

Levels of the Leading Indicator of Employment and Cyclical Employment

Monthly CHANGESIN Value of Leading Indicator*

Sep-13 / Oct-13 / Nov-13 / Dec-13 / Jan-14 / Feb-14
∆Leading Indicator / 0.024 / 0.014 / -0.020 / -0.040 / -0.035 / -0.023
*monthly changes in standard deviations from the cyclical trend

Components of the Leading Indicator (shortterm TREND)**

Series / Percentage Change over the Year / Percentage Change over the Month / Weights*** (%) / Weighted Change over theMonth****
ANZ Newspaper Job Ads
(February 2014 release) / -23.0% / -0.2% / 53.1 / 0.017
Dun and Bradstreet Employment Expectations (% pt change)
(Year to June Quarter 2013
- February 2014release) / -5.3%pts / -0.3%pts / 24.6 / -0.021
Westpac-Melbourne Institute
Leading Index of Economic Activity
(January 2014 release) / 0.7% / 0.0% / 7.4 / 0.005
Westpac-Melbourne Institute
Consumer Sentiment Index
(January 2014 release) / 1.8% / -0.8% / 14.9 / -0.023
∆ Leading Indicator: / -0.023

**Note:The cyclical components of each series, and not the trend percentage changes shown above, contribute to the movements in the Leading Indicator.Data have been trended bythe Department of Employment using the Henderson 13-term centred moving average process. ***The latest revision of the weights in the Indicator occurred in February 2009. **** Components may not sum to the total owing to rounding errors.

Technical Notes

TheIndicatoris the average of the normalised and standardised cyclical elements of four series which have been shown to lead cyclical employment consistently over a long period. The cyclical components and the composite Indicator for previous months are subject to revision when new statistics are incorporated.

The Indicator is designed to give advance warning of turning points in ‘cyclical employment’ (i.e. the deviation of the one-year trendin employment from the six-year trend). The average lead time of the Indicator over the series (i.e. the time between a peak or trough in the Indicator and the corresponding peak or trough in cyclical employment) is around nine months, although it has varied over the past decade. For instance, the lead time between the most recent peaks was five months. A ‘turning point’ in the Indicator is said to be confirmed when there are six consecutive monthly movements in the same direction after the turning point. A fall (or rise) in theIndicator does not necessarily mean that the level of employment will immediately fall (or rise). Rather, it implies that after a lag, the growth rate of employment may fall below (or rise above) its sixyear trend rate of about 1.1per cent a year.

The Indicator incorporates data lagged one year for the Dun and Bradstreet Employment Expectations series and the most up to date data for other series. This is based on econometric testing which revealed that the Dun and Bradstreet series had a longer lag.From February 2014, the Indicator incorporated the new Westpac-Melbourne Institute Leading Index of Economic Activity, as the old version of the Index is no longer being released.

The date of the issue of the Indicator, and the labels for the x-axis of the chart, relate to the month the Indicator is released. The data used to derive the cyclical employment chart line, however, are two months behind the release month for the Indicator.

RELEASE DETAILS

The Indicator is available on the Internet at approximately 2pm on the day of its release. The next issue isscheduled for release on Wednesday 12March2014.

Contact OfficerS

Mr Jan Lee/Mr Nick O’Gorman/Dr Vince Law

Labour Economics Section, Department of Employment

Ph: (02) 6121 6712/(02) 6121 8330/(02) 6240 0778

Email: