Labour market conditions in Australia remained strong in April, with employment recording a sharp increase and the unemployment and participation rates continuing to indicate very tight conditions. This will likely keep the focus of the Reserve Bank of Australia on risks to the inflation outlook ahead of its policy meeting next week and may reinforce concerns among officials about whether an immediate rate cut is warranted.

The number of people employed in Australia rose by 89,000 in April, up from an increase 32,200 in March and well above the consensus forecast for an increase of 24,000. Full-time employment rose by 59,500 persons after a previous increase 15,000 persons, while part-time employment rose by 29,500 persons after a previous increase of of 17,200 persons.

Today's data also show the unemployment rate was steady at 4.1 percent in April. The unemployment rate has been little changed from this level for a year. The participation rate rose from 66.8 percent to 67.1 percent, close to its recent high.

Employment is expected up 24,000 on the month in April versus 32,000 in March. The unemployment rate is seen flat at 4.1 percent versus 4.1 percent in March.

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.