The undermining of confidence – or why Radio NZ should try poking around in chicken guts

The buggers who produce the business bulletin for Radio NZ’s “Morning Report” had good news for us about employment growth when they kicked off their new year.

Then they found some stuff published by the Institute of Economic Research last year and fed that to their listening audience as if to say the more cheery expectation should be ignored.

The outrage is that Radio NZ cherry-picked their data and by-passed the optimistic stuff tucked away in the tables in the NZIER report.

Alf, who believes pessimistic economic news undermines business confidence and exacerbates recessions and slowdowns, was dismayed.

Did the wankers at Radio NZ have a bad Christmas holiday or something?

The good news was that improved confidence in the economic recovery is prompting some companies to start to take on more staff.

A survey by Hudson Recruitment of more than 1200 employers shows almost 20% plan to hire more permanent staff in the next three months.

That’s almost 9% more than last quarter.

And the number of employers looking to cut staff has fallen – down to about 8% – from just over 11% three months ago.

Hudson says businesses appear to be putting the hard times behind them.

Executive general manager Marc Burrage says temporary and contracting employment intentions are still positive, but they are easing. However, there is a significant increase in permanent hiring intentions.

Mr Burrage says it’s encouraging to see that all sectors are showing an improvement.

Yes, it is encouragaging.

Mr Burrage says he expects confidence to continue to climb in coming quarters.

The improvement is being led by the IT industry, but even the manufacturing and financial sectors are showing signs of recovery.

However, about 8% of employers say they expect to make further redundancies.

On Radio NZ’s website, the news item – not unreasonably – goes on to say about 150,000 people are currently unemployed, and some economists expect the dole queue to keep growing for another six months.

But in its business bulletin around 6.45am, we heard Burrage say the level of positivity was partiuclarly pleasing, as we go into the new year.

The presenter threw a bucket of water on this, saying:

However, a survey of economists by the Institute of Economic Research last year found that they expected unemployment to remain at 7% until March 2011 before improving to just over 6% by 2012.

Which survey? The institute publishes the results of its surveys once each quarter.

Presumably Radio NZ meant the December survey.

The results are published under the title NZIER Consensus Forecasts., which is a glorious misnomer, because economists notoriously do not reach a consensus or a conclusion.

It’s a survey of about a dozen economists whose forecasts can vary hugely.

So how much variance was there in the December round-up of forecasts?

The forecasts for the unemployment rate in March 2011 range from 6.3% to 7.5%. The mean forecast – the figure presumably seized on by Radio NZ’s business reporter – was 7%.

The forecast for the unemployment rate in March 2011 ranged from a cheering 5.5% to 6.7%. The mean was 6.3%.

These variances give strength to the observation of the esteemed American economist John Kenneth Galbraith, who said

“The only function of economic forecasting is to make astrology look respectable.”

Alf’s advice to Radio NZ, accordingly, is that it should turn to astrologers for its forecasts. The results might be more reliable.

Or they could do what seers once did, and perhaps still do in some part of the world: slaugher a chook, spill its guts on the ground, poke the guts with a stick, then peer at the entrails and gain remarkable insights into our future.

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