Labour market conditions in Australia weakened unexpectedly in February, with employment falling sharply. Officials noted that this decline was partly driven by lower participation by older workers, with the number of people retiring from the workforce picking up in recent months.

The number of people employed in Australia fell by 52,800 in February, down from an increase of 44,000 in January and well below the consensus forecast for an increase of 28,000. Full-time employment fell by 35,700 persons after a previous increase of 54,100 persons, while part-time employment fell by 17,100 persons after a decline of 10,100 persons previously. Hours worked fell 0.4 percent on the month, as it did previously.

Today's data also show the unemployment rate was steady at 4.1 percent in February. The participation rate fell from a record high of 67.3 percent to 66.8 percent.

The consensus looks for jobs up a modest 28,000 on the month. The jobless rate is expected unchanged at 4.1 percent from 4.1 percent in January and up from 4.0 percent in December.

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.