Statistics Canada erred on jobs numbers, revision...
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Aug 12, 2014  |  Vote 0    0

Statistics Canada erred on jobs numbers, revision coming

Just days after saying only 200 new jobs were added across Canada in July, Statistics Canada says it goofed. But it won’t fix it until Friday


Just days after issuing stunning numbers showing only 200 new jobs were added to the economy in July, a red-faced Statistics Canada admitted Tuesday that its report was flawed but it won’t be corrected until Friday.

It refused to offer any details, saying only it was a processing error, leading some economists to speculate it will mean more jobs were added last month, though it could also be fewer.

“I can’t personally remember a previous incident where they have done this for the labour force numbers,” said Peter Buchanan, senior economist at CIBC World Markets.

“Those numbers are terribly important to the market. I think they wanted to get the news out as soon as possible,” he said.

The labour force survey numbers are considered a key measure of how the economy is performing. However, in recent months the number of jobs added or shed has been fluctuating wildly, unlike in the U.S. where the economy appears to be roaring ahead.

“While the numbers have always see-sawed, it seems they are see-sawing a little more vigorously than in the past,” Buchanan added.

Some have speculated that it may reflect a volatile economy, though last week’s report raised growing concerns about a stalling economy given many economists had forecast 20,000 new jobs added in July.

Statistics Canada has been under increased scrutiny in recent years especially after the Harper government eliminated the long form census.

Last August, StatsCan was forced to delay the release of anticipated data from 2011 census, after experts found a problem in the data sets.

Some economists on Tuesday were critical that StatsCan officials didn’t immediately disclose the mistake in the jobs report, if they have identified it.

“I am puzzled why they would do this,” said Mike Moffatt, an assistant professor at the Ivey School of Business at Western University, comparing it to slowly “pulling off a band aid, causing more pain than necessary.”

If the actual number of jobs is wrong, it could affect the reported unemployment rate of 7 per cent, which fell a tenth of point in July. Or the error could be in wage estimates or the performance of different sectors.

Sylvie Michaud, StatsCan’s director-general of education, labour and income statistics, would only say the mistake is in one of the statistical processes, so all the numbers are being rerun in time for a new release on Friday.

Michaud said as soon as the error was identified, StatsCan wanted to alert the public, because the data is used by many researchers.

“We found an error. We will correct it,” she said. “It was important for us to acknowledge it.”

Statistics Canada will tap an independent team to determine how the error occurred, and will make the review public.

“We have so many quality assurance processes especially for that (labour force) survey, so that’s why we will have an independent team looking at how could it happen?” Michaud said.

Philip Cross, who previously worked as Statistics Canada’s chief economic analyst, said data errors have occurred in the past on everything from the consumer price index to import numbers to provincial GDP figures.

However, he said it would be unusual for StatsCan to go outside the organization and seek an independent review. Cross said the labour force survey numbers are high-profile, with lots of checks and balances in place, adding that was specifically his role in the past.

“Nevertheless, it’s a big place, and it’s full of humans. And humans make mistakes,” said Cross, who is now a fellow at the Macdonald Laurier Institute.

“It’s up to analysts to accept that data is imperfect. And if you are over reliant on data, at some point, you are building your house on quick sand,” he said.

When the jobs report came out on Friday, the Canadian dollar fell 0.41 of a U.S. cent to 91.15 (U.S.) cents on the data. It ended the trading day at 91.17 (U.S.) cents.

The Canadian dollar jumped immediately after StatsCan disclosed the error Tuesday, but ended the day at 91.56 (U.S.), down 0.02 of a cent.

David Madani, Canada economist at Capital Economics, said the jobs data has been fluctuating from month to month, but when combined with business payroll data, it suggests a weaker economy than forecast.

“I don’t think the error in July will change the bigger picture,” Madani said. “It’s underperforming its potential growth rate of 2 per cent.”

Unifor economist Jim Stanford agreed. “Regardless of whether they revise the numbers, up or down, it’s not going to change the longer run picture of a labour market that is stuck in the mud,” Stanford said.

Toronto Star

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