(Bloomberg) -- Bank of England policymakers will have to operate with sub-standard jobs market data until next year after the Office for National Statistics uncovered problems with the new “transformed” survey that will replace the flawed existing release.
The ONS had planned to introduce the revamped Labour Force Survey, a comprehensive online report, in September but will now continue testing it for another six months and report back in the first quarter of next year.
The delay will leave the BOE half-sighted on the labor market at a critical juncture for monetary policy. Rate-cut decisions hinge on whether the market is loosening but the lack of reliable data has left policymakers flying partially blind.
The BOE has complained about the “considerable uncertainty” caused by incomplete data on numbers and characteristics of those in the workforce. Wage figures, however, are not affected.
A collapse in the response rate to the old survey rendered it unreliable and parts of it were cancelled in October last year. Improved LFS data was reinstated in February but economists were advised to treat the figures with caution. The transformed version was supposed to remedy the response rate problem and expand it by moving online. However, the new survey has run into its own data collection issues.
Those include a bias in responses toward older age groups, who are more likely to complete the survey and remain available for follow-ups. The ONS also found “an increased level of partial responses” compared with the old in-person survey.
“This is because of the online nature of the survey,” the ONS said in a statement. Some individuals drop out before completion, which leaves important characteristics data missing. In households with more than one person, the ONS is only getting responses for one member when the TLFS wants everyone covered.
“Collecting certain complex variables is challenging when moving from an interviewer led survey to an online collection,” the ONS said. It will trial a shorter online questionnaire and conduct “discrete design tests” in the autumn.
Until the problems have been addressed, the ONS will run both the new and the old survey side by side. The ONS said it has made improvements to the old survey to increase response rates and will reweight it for updated population projections by the end of the year.
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