Australian labour market data for June released today showed a stronger-than-expected increase in employment, unemployment steady at a low rate, and very high participation, indicating that conditions remain robust despite substantial policy tightening by the Reserve Bank of Australia. Although RBA officials paused this tightening at their last meeting earlier in the month, they identified ongoing strength in wage growth as a factor that could warrant further rate increases in upcoming meetings.

The number of employed in Australia rose by 32,600 persons in June, down from an increase of 76,600 persons in May but stronger than the consensus forecast for an increase of 17,000. Full-time employment rose by 39,300 persons after increasing by 61,700 previously, while there was a fall of 6,700 persons in part-time employment after a previous increase of 14,300. Work hours rose 0.3 percent on the month after dropping 1.8 percent previously, with the previous large decline partly reflecting the impact of the timing of Easter holidays.

Today's data show the unemployment rate fell was unchanged at 3.5 percent in June, just below the consensus forecast of 3.6 percent. The participation rate eased from a record high of 66.9 percent in May to 66.8 percent in June.

At a consensus rise of 17,000, employment in June is expected to fall back versus May's much larger-than-expected rise of 75,900. Unemployment is expected to hold at May's lower-than-expected rate of 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.