StatsCan flub prompts change in methodology

Meanwhile, consumer price index retrofit wraps up

July’s jobs data was bleak — or so we thought.

Statistics Canada initially released the Labour Force Survey in August as planned, but retracted the information, citing an error. Days later, the corrected jobs report was re-released, noting the Canadian economy added almost 42,000 jobs in July, as opposed to the originally reported 200 positions.

Sylvie Michaud, director-general of education, labour and income statistics, said the agency is undergoing an internal review process, the report for which is due out in a few weeks. Included in it will be recommendations for new checks and balances to ensure another such error won’t happen again.

"What I can tell you is there was an error in the processing in one of our systems. We think it was a human error," she explained.

In recent years, Statistics Canada has undergone fiscal and political attacks that have contributed to a damaged reputation, according to Jim Stanford, an economist at Unifor. As such, all eyes were watching when the agency bungled one of its most coveted reports.

"There’s no smoking gun to say this particular error was the result of budget cuts. Any organization that’s losing hundreds of trained staff, many tens of thousands of dollars and facing some politically-motivated micromanagement, there’s no doubt about that," Stanford said, adding that "Clearly, they need a double-check mechanism to prevent that from occurring again."

But Michaud countered that "the Labour Force Survey budget was not cut, so (the error) cannot be attributed directly to that."

According to Philip Cross, a senior fellow at the MacDonald-Laurier Institute and former chief economic analyst at Statistics Canada, to err is human.

"It raises your eyebrow, but it’s not unusual," Cross said, adding that, in 30-plus years working at the statistical agency, he made one mistake. "It happens, human beings are imperfect."

"If you’re not trying to improve your data, you’re falling behind. The world is constantly changing. It’s constantly a challenge for Statistics Canada," Cross said.

The Labour Force Survey, for instance, would do well to beef up some of its focus areas. Cross suggested taking a closer look at the ways in which citizens exit the workforce, as opposed to how they enter the workforce. The definition of a retired person can have various meanings — Cross himself said he collects a pension from Statistics Canada but would not consider himself in retirement.

More focus should also be placed on precarious and part-time work to reflect a changing labour force. Cross cited the problem of those workers who live in Ontario but take one or two-week job assignments in Alberta.

Keeping up with the consumer

Statistics Canada is also undergoing a major overhaul of its other flagship report, the consumer price index (CPI), which is nearing the tail-end of a five-year undertaking.

"We were lagging in terms of what the international recommendations say we should be doing in terms of quality adjusting and accounting for the changes in characteristics of products," explained Richard Evans, director of Statistics Canada’s consumer prices division.

As such, the revised methodology will reflect international best practices. One of the most prominent changes is updating the basket weights every four years to every two years. This will give users a more accurate picture of the pure inflation rate, as opposed to reflecting that the product themselves have changed.

This is especially important in a world where technology advances so rapidly, items can be rendered obsolete in mere months (think iPods, televisions and cellphones). Quality adjusting plays its part here, as it accounts for factors such as screen widths or phone features.

Assigning a basket weight puts the way Canadians spend their money in perspective. For example, cheese and gasoline may both be included in the basket of goods measured, but in most cases, a person is likely to spend much more per month on fuel than cheese.

"This matters especially in a low inflation environment because every little tenth of a percentage in the growth of the CPI is being scrutinized," Evans said.

Though the method of choice for the agency remains the household CPI survey, Evans noted new trends emerging on the international stage that Statistics Canada is exploring. That includes web scraping, in which data is obtained using software to pull statistics from certain websites.

One of the most promising areas, Evans said, is scanner data. When an item is purchased at a checkout, a cashier will scan a barcode and create a record in a database. If Statistics Canada had access to that information, it would be able to determine how many units are sold at a much faster rate than sending interviewers into stores.

"You could have an instantaneous, real-time CPI," he said. "That’s a slow process, to survey. It’s old technology, but we’re starting to experiment to look at the big data that’s all around us."

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