Australian labour market data for August released today showed a stronger-than-expected rebound in employment, a steady unemployment rate, and an increase in participation. Higher employment, however, was largely driven by part-time employment, with hours worked falling on the month.

The number of employed in Australia rose by 64,900 persons in August after falling by 14,600 in July, well above the consensus forecast for an increase of 25,000. Full-time employment rose by 2,800 persons after falling by 24,200, while part-time employment rose by 62,100 after increasing by 9,600 previously. Hours worked fell 0.5 percent on the month after increasing 0.2 percent previously. Today's data also show the unemployment rate was unchanged at 3.7 percent in August, matching the consensus forecast. The participation rate rose from 66.9 percent to 67.0 percent.

Today's data suggest conditions in the labour market remain strong as the Reserve Bank of Australia has paused policy tightening in the last three months. Officials, however, have advised that some further tightening of monetary policy may yet be required, and the ongoing tightness in labour markets shown today may reinforce concerns officials have about the inflation outlook.

At a consensus rise of 25,000, employment in August is expected to rebound from July's 14,600 fall. Unemployment is expected to hold steady at 3.7 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.