AU: Labour Force Survey

Wed May 16 20:30:00 CDT 2018

Consensus Actual Previous Revised
Unemployment 5.5% 5.6% 5.5%
Employment 20,000 22,600 4900 -700
Participation Rate 65.5% 65.6% 65.5%

Australia's labour market saw an increase of 22,600 in the number of employed persons in April (seasonally adjusted), rebounding from a revised fall of 700 in March and above the consensus forecast for an increase of 20,000. The unemployment rate rose from 5.5 percent in March to 5.6 percent in April, just above the consensus forecast of 5.5 percent, while the participation rate advanced from 65.5 percent to 65.6 percent, just above the consensus forecast of 65.5 percent.

The increase in headline employment in April was driven by full-time employment, up 32,700 on the month after falling by 25,100 previously. This was partly offset by a fall in part-time employment of 10,000 after an increase of 24,400 previously. The total numbers of hours worked in April increased 1.1 percent on the month in April after increasing 0.3 percent in March. Over the last twelve months, full-time employment has increased by 265,200 persons, while part-time employment has increased by 66,900 persons.

Today's data show labour market conditions remain solid, despite the increase in the unemployment rate. Officials at the Reserve Bank of Australia have noted that strong employment gains have been accompanied by a similar increase in labour supply, with the participation rate remaining close to record highs. Although this extra supply has kept the unemployment rate relatively steady in recent months, officials expect further growth in employment will result in a renewed decline in the unemployment rate. This, in turn, is expected to result in stronger growth in wages and a pick-up in headline 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.