AU: Labour Force Survey

Wed Oct 18 19:30:00 CDT 2017

Consensus Actual Previous Revised
Unemployment 5.6% 5.5% 5.6%
Employment 15,000 19,800 54,200 53,000
Participation Rate 65.3% 65.2% 65.3% 65.2%

Australia's labour market saw an increase of 19,800 in the number of employed persons in September (seasonally adjusted), down from the revised increase of 53,000 recorded in August but exceeding the consensus forecast for an increase of 15,000. Australia has now recorded twelve consecutive months of employment growth. The unemployment rate eased from 5.6 percent in August to 5.5 percent in September, just below the consensus forecast of 5.6 percent, while the participation rate was steady at 65.2 percent, also just below the consensus forecast of 65.3 percent.

The increase in headline employment in September was driven mainly by part-time jobs, which increased by 13,700 persons after a similar increase of 13,600 persons in August. Full-time employment also increased by 6,100 persons, well down from an increase of 39,500 persons in July. The total number of hours worked in September increased by 0.7 percent. Over the last twelve months, seasonally-adjusted full-time employment has increased by 315,900 persons, while part-time employment has increased by 55,600 persons.

The number of people looking for work fell by 11,800 in September, with the unemployment rate, at 5.5 percent, matches the recent multi-year low recorded in May. The participation rate remains at its highest level since 2011.

Today's data is consistent with the assessment by officials at the Reserve Bank of Australia that recent growth in employment is likely to continue in the months ahead. Officials also expect this to translate into stronger wage growth in time, consistent with their forecast for a gradual pick up in inflation.

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.

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.