Using job transitions data as a labour market indicator
The Reserve Bank of New Zealand (RBNZ) is now mandated to support the maximum sustainable level of employment. This new objective has lead us to look for new sources of data that allow us to better understand and predict labour market outcomes.
We use data measuring the changes in employment states of all tax-paying New Zealanders to nowcast the unemployment rate in New Zealand. We find that using this wide-coverage data set helps us to estimate current unemployment more accurately than the standard forecasting benchmarks.