Employment in February increased more than expected while the unemployment rate was lower than anticipated. The unemployment rate slipped to 6.3 percent from 6.4 percent in January. Expectations were that the rate would remain unchanged at 6.4 percent. The labour force participation rate declined to 64.6 from 64.7 the month before.
Employment was up 15,600 to 11,652,400 in February 2015. The increase in employment was driven by increases in both full-time (up 10,300) and part-time employment (up 5,300). The number of unemployed people decreased 15,800 to 777,300. The decrease was driven by those looking only for part-time work, down 18,600.
The underemployment rate was 8.6 percent, a decrease of 0.1 percentage points from November 2014 based on unrounded estimates. Combined with the unemployment rate of 6.3 percent, the latest seasonally adjusted estimate of total labour force underutilization was 14.9 percent, a decrease of 0.1 percentage points from November 2014.
The Australian economy is under pressure as the mining boom ends. Recent methodological changes have raised questions over the accuracy of the data. This has prompted the ABS to launch an independent review of the changes and make several revisions to previously published data in recent months.
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.
This report is used as an indicator of the health of the domestic economy. Employment trends highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.
The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.