AU: Labour Force Survey

Wed Dec 13 18:30:00 CST 2017

Consensus Actual Previous Revised
Unemployment 5.4% 5.4% 5.4%
Employment 17,000 61,600 3,700 7,800
Participation Rate 65.1% 65.5% 65.1%

Australia's labour market saw an increase of 61,600 in the number of employed persons in November (seasonally adjusted), up sharply from a revised increase of 7,800 in October and well above of the consensus forecast for an increase of 17,000. This is the fourteenth consecutive monthly increase in payrolls and the strongest monthly result so far this year. The unemployment rate was steady at 5.4 percent in November, in line with the consensus forecast, while the participation rate advanced from 65.1 percent to 65.5 percent, above the consensus forecast of 65.1 percent.

The increase in headline employment in November reflects gains on both full-time and part-time employment. Full-time jobs, grew by 41,900, up from an increase in 31,000 in October, while part-time jobs grew by 19,700, largely reversing a decline of 23,200 the previous month. The total number of hours worked in November increased by 0.6 percent, down from an increase of 0.3 percent in October. Over the last twelve months, seasonally-adjusted full-time employment has increased by 305,000 persons, while part-time employment has increased by 79,000 persons.

The number of people looking for work rose by 4,100 in November, with the unemployment rate, at 5.4 percent, matching its lowest level since February 2013. The increase in the participation rate takes it to its highest level since 2010 and provides strong evidence that conditions in the labour market are continuing to improve.

Today's data are consistent with the assessment of labour market conditions made by the Reserve Bank of Australia earlier this month, with officials noting that "various forward-looking indicators continue to point to solid growth in employment over the period ahead". Officials, however continue to expect that this strength in employment growth will result in only a gradual pick-up in wage pressures over the forecast period, reinforcing their view that headline inflation is also likely to pick up only gradually.

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.