Australian labour market data for November released today showed a strong increase in employment, an increase in the unemployment rate, and higher participation. Today's data are consistent with the Reserve Bank of Australia's assessment that labour conditions remain relatively tight and will likely keep officials' focus on upside risks to the inflation outlook.

The number of employed persons in Australia rose by 61,500 in November after increasing by 55,000 in October. Employment has increased strongly in three of the last four months. Full-time employment rose by 57,000 persons after a previous increase of 17,000, while part-time employment rose by 4,500 after increasing by 37,900 previously. Hours worked fell 0.1 percent on the month after increasing 0.5 percent previously.

Today's data also show the unemployment rate rose from 3.7 percent in October to 3.9 percent in November. This increase in unemployment largely reflects additional people entering the labour force, with the participation rate advancing from 67.0 percent to a record high of 67.2 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.