The Australian job market is far more dynamic and even more resilient than is suggested by official figures, if Xero Small Business Insights is anything to go by. Xero is the online accounting software package taking Australia and the world by storm since it was founded 10 years ago.
Favoured by small business owners, the software allows Xero to aggregate key metrics such as staff numbers and to track movement by geography and over time across its 500,000 Australian subscribers. Rather than rely on a survey of a sample of workers published each month by the Australian Bureau of Statistics, the anonymised Xero dataset captures real time metrics for a vastly larger cohort.
The ABS surveys about 55,000 people in the labour force each month; Xero Small Business Insights shows percentage changes to staffing levels across several hundred thousand workers. Both datasets point in broadly the same direction, but Xero Small Business Insights adds an important dimension.
The ABS jobs report is a snapshot taken halfway through the month. For example, the August employment data, published several weeks ago, was collected in mid-August.
That’s where Xero Small Business Insights comes in. Xero has data on employment captured on 31 August, and it has released the figures today — more than a week ahead of the ABS report that will cover late August.
Technically, the Xero perspective on employment change is a heartbeat faster than the ABS’s, and promises to be every month. If the economy is going through change, say growing or shrinking, the direction of the shift could be picked up first by the more timely Xero dataset.
This early warning role of Xero Small Business Insights can be seen by comparing the percentage movement in employment as measured by the ABS, and as recorded by a select cohort of Xero businesses. For example, The ABS’s December figure was up 0.7 percent on November whereas the later Xero figure for December was up only 0.2 percent.
The January figures confirmed the trend: the ABS’s methodology revealed a 2.2 percent reduction in employment while the Xero figure was down 3.5 percent. Both datasets pointed in the same direction in January but the early warning was signalled by the Xero data, captured the last day of the month, which was well below the ABS figure.
The message is clear. Xero Small Business Insights is a must-have, or at the very least a must-consult ready reckoner, on the rise and fall of employment. Interestingly, the recent Xero dataset comparing employment at the end of August with the end of July shows strong growth of 1.1 percent. The ABS data, on the other hand, comparing employment levels between early August with early July is still showing a modest contraction in jobs (down 0.2 percent).
But there is even more insight to be gleaned from the Xero dataset. In a direct comparison of the percentage change to monthly employment between the ABS and Xero datasets for the last 12 months, the ABS shows steadier and perhaps less volatile movements. And rightly so. The ABS survey covers private and public sector workers as well as workers in big, medium and small business. Xero businesses are exclusively private sector and favour the small and medium enterprise sector.
What the ABS labour force surveys do not reveal are the ups and downs of employment in small business. Casual labour is laid off over the January shutdown and also in April at Easter and in July at the beginning of the financial year. These downswings are offset by upswings in February, May and August.
Bigger businesses and the public sector do not respond to these tidal flows in the demand for labour. The private-sector small-business workforce might be volatile and seasonal but it is also rhythmic. For the first time we are seeing exposed a new perspective of the resilient and dynamic Australian workforce.
And who knows, perhaps the Xero optimism that saw demand for labour over the month to late August rise by a greater margin than was measured by the ABS over the month to early August, will be confirmed by even stronger employment figures to be released by the ABS on 19 October. But here’s the beauty of the Xero SBI dataset. It is quite possible that this new dataset is giving you a heads up a week in advance. Let’s wait and see what the ABS figures for September show because Xero is suggesting it may reveal a strengthening trend, which is good for the overall economy.
Either way, you cannot afford to miss any updates, which are released every month for free. Do as I have already done and sign up today.