Growth, inflation and labour market all easing
China’s new labour force survey could finally provide unemployment clarity.
In 2016, China’s National Bureau of Statistics is expected to release the results of a new monthly labour force survey. While there are only limited details as to the scope of this survey, the results may finally shed some light on one of the most opaque elements of China’s economy – its unemployment rate. The stability of China’s official unemployment rate over the past fifteen years has been a source of scepticism, with most observers considering the measure as an unreliable indicator of underlying labour market conditions.
China’s registered jobless rate has ranged between 4.0% and 4.3% from late 2002 to 2015, despite the impact of the global financial crisis during this period (when anecdotal evidence suggested that tens of millions of export-oriented factory workers lost their jobs), along with the slowdown in economic growth in recent years. Its stability is in stark contrast to the volatility of unemployment in advanced countries over this period. Among other issues, this measure excludes migrant workers – who at around 270 million in 2014 accounted for almost one-fifth of China’s population.
According to media reports, the motivation for establishing broader (and hopefully more accurate) data related to the labour market was primarily to provide the State Council with timely data around the health of the economy. This seems consistent with the stated aim of transforming the economy into one centred on domestic consumption – closely tied to household income and wealth – rather than investment. From our perspective, we hope the greater benefit that policy makers will derive from timely labour market data will be sufficient to limit the potential distortions. That said, this will only become clear with time
For the full report, please see the attached document:
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.