Australian labour market data for March released today showed a stronger-than-expected increase in employment, while the unemployment rate and participation rate were steady and continue to indicate tight conditions in the labour market. Today's data also showed an increase in the female participation rate to a record high of 62.5 percent.

The number of employed persons in Australia rose by 53,000 persons in March, down from an increase of 63,600 persons in February but well above the consensus forecast for an increase of 21,700. Full-time employment rose by 72,200 persons after increasing by 79,200 persons previously, while there was a decline of 19,200 persons in part-time employment after a previous fall of 15,600 persons. Work hours fell 0.2 percent on the month after surging 5.1 percent previously. Today's data show the unemployment rate was steady at 3.5 percent in February, just below the consensus forecast of 3.6 percent, while the participation rate was also unchanged at 66.7 percent, remaining close to record highs.

Although the Reserve Bank of Australia left policy rates on hold at their meeting earlier this month, officials advise that further policy tightening may be considered in upcoming meetings. Today's data showing ongoing robust conditions in the labour market may strengthen the case for additional rate hikes if inflation pressures fail to moderate at a fast enough pace.

At a consensus rise of 21,700, employment growth in March is expected to slow versus a strong 64,600 rise in February. The unemployment rate is expected to rise 1 tenth to 3.6 percent.

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.