Google unemployment…

Central banks take seriously the idea that there is information in internet searches that is useful in taking the economy’s pulse — see for example, the following from the bank of England’s Q2 Bulletin.

http://www.bankofengland.co.uk/publications/quarterlybulletin/qb110206.pdf

After a little bit of fiddling with the search term, I decided to use “unemployment benefits” for Australia — this delivered the following (note i seasonally adjusted the google data).

The historical correlation suggests that the unemplyoment rate is about to head lower. Google got the recent flat spot right, and now their search results suggest the unemployment rate is about to head lower.

20110615-084232.jpg

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7 Responses to Google unemployment…

  1. Manny C says:

    You just found yourself a leading economic indictor. Rate rise?

    • Ricardo says:

      Well, it is not a leader – it is concurrent. It is just that the other data suffers production lags. But yes, a lower unemployment rate should mean tighter money.

      Sent from my iPad

  2. Manny C says:

    Good distinction. Hadn’t considered production lag.

  3. on your Marx says:

    sorry for being a bit simple what what is your actual data source for unemployment benefits

  4. ssec says:

    Very nice! However the most recent (June) data might not be up to date yet? On the graph they say: “The last value on the graph is based on partial data and may change” . This seems quite visible on the 12 months graph. Plus you can’t plot yet the last 30 days. Probably better results by the end of June.

    • Ricardo says:

      Good point. Yes plenty of time for things to change. Especially with Europe apparently blowing up, folks might become a bit more worried about their outlook.

      Sent from my iPad

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