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

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 June and July, 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 July 2018 had a lower employment to population ratio than the group it replaced (63.2 per cent in June 2018, down to 61.1 per cent in July 2018), and was lower than the ratio for the entire sample (62.1 per cent). This reflected a larger than usual rotation group effect, with the second most employed group in June being replaced by the second least employed in July.

The unemployment rate of the incoming rotation group was 1.1 percentage points higher than the whole sample (6.3 per cent, compared to 5.2 per cent), and is the most unemployed group. It replaced the group with the lowest rate (4.5 per cent in June 2018). Its participation rate was below that of the sample as a whole (65.2 per cent, compared to 65.5 per cent), and below the group it replaced (66.2 per cent in June 2018).

The rotation group effects in July 2018 were most pronounced in Queensland, Tasmania and the ACT.


OUTGOING ROTATION GROUP

In looking ahead to the August 2018 estimates, the outgoing rotation group in July 2018, which will be replaced by a new incoming rotation group in August 2018, has the same employment to population ratio (62.1 per cent in July 2018) as the sample as a whole (62.1 per cent) in original terms. The full-time employment to population ratio (42.6 per cent) is marginally higher than the ratio for the entire sample (42.5 per cent).

The unemployment rate for the outgoing rotation group in July 2018 is the same as the sample as a whole (5.2 per cent). The participation rate for the outgoing rotation group in July 2018 is also the same as the sample as a whole (65.5 per cent).


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 provide the best measure of the underlying behaviour of the labour market and are the focus of the commentary in this publication.