AU: Labour Force Survey

Wed Sep 09 20:30:00 CDT 2015

Consensus Actual Previous Revised
Unemployment 6.2% 6.2% 6.3% 6.3%
Employment 6,000 17,400 38,500 39,200
Participation Rate 65.0% 65.0% 65.1%

August unemployment rate was 6.2 percent, down from the revised July rate of 6.3 percent. Employment was up 17,400 after gaining 39,200 the month before. The seasonally adjusted labour force participation rate decreased 0.1 percentage point to 65.0 percent in the August 2015 estimate.

Of the 17,400 increase in jobs, full time employment added 11,500 positions while temporary work was up 5,900. The number of unemployed decreased 14,400 to 781,100. The number of unemployed persons looking for full-time work decreased 3,500 to 561,400 and the number of unemployed persons only looking for part-time work decreased 11,000 to 219,700.

The seasonally adjusted underemployment rate remained steady at 8.4 percent in August 2015. Combined with the unemployment rate, the latest seasonally adjusted estimate of total labour force underutilization was unchanged at 14.3 percent in August 2015, from a revised May 2015 estimate.

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.