AU: Labour Force Survey


Wed Feb 14 18:30:00 CST 2018

Consensus Actual Previous
Unemployment 5.4% 5.5% 5.5%
Employment 15,000 16,000 34,700
Participation Rate 65.6% 65.6% 65.7%

Highlights
Australia's labour market saw an increase of 16,000 in the number of employed persons in January (seasonally adjusted), down from a revised increase of 33,500 in December but close to the consensus forecast for an increase of 15,000. The unemployment rate fell from a revised 5.6 percent in December to 5.5 percent in January, just above the consensus forecast of 5.4 percent, while the participation rate fell slightly from 65.7 percent to 65.6 percent, in line with the consensus forecast.

The increase in headline employment in January was driven by a strong increase in part-time employment, outweighing a decline in full-time employment. Part-time jobs increased by 65,900 in January, up from an increase of 19,500 in December, while full-time jobs dropped by 49,800, easily reversing the 15,100 increase recorded in December. The total number of hours worked in the month fell by 1.4 percent seasonally-adjusted in January after a fall of 0.5 percent in December. Over the last twelve months, full-time employment has increased by 293,200 persons, while part-time employment has increased by 110,100 persons.

Although hours worked and full-time employment fell in January, this follows several months of generally strong labour market data, and the low unemployment rate and high participation rate suggest conditions remain relatively positive at the start of the new year. Officials at the Reserve Bank of Australia expect solid employment growth to continue but also forecast that wage pressures will likely remain subdued over the forecast period, reinforcing their view that headline inflation is also likely to pick up only gradually.

Definition
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 labour force.

Description
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.