Thursday 7th February 2013
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New Zealand dollar shed half a cent against the greenback after a fall in the headline unemployment rate masked figures showing kiwis quit the workforce in droves and employment shrank in the final three months of 2012.
The unemployment rate fell to 6.9 percent in the December quarter from a 13-year high as people stopped looking for work, according to Statistics New Zealand's household labour force survey. The participation rate fell a record 1.2 percentage points to 67.2 percent, the lowest level since September 2004, while employment shrank 1 percent.
Economists were expecting a participation rate of 68.5 percent and quarterly jobs growth of 0.4 percent. The number of people not in the labour force climbed 3.8 percent in the quarter.
"The labour market is softer than what we would have thought," said Robin Clements, economist at UBS. "The surprise for this quarter was another drop in employment, driven by part-time."
New Zealand's labour market has been struggling to convert hiring intentions into actual jobs as the economy slowly recovers, and the headline unemployment rate has been a bone of contention among economists who say it's out of synch with other data. Forecasts have been surprised at the level of unemployment in the three quarters before today's release, which was slightly below the consensus.
The kiwi fell as low as 83.79 US cents from 84.17 cents immediately before the release and recently traded at 83.87 cents.
Westpac Banking market strategist Imre Speizer said the reaction in the currency was "probably overdone" with today's figures showing little change in the overall labour market.
"The labour market is still weak - that's the story," he said.
Today's figures showed full-time employment grew 0.4 percent to 1.71 million in the quarter, while the number of part-time jobs plunged 6 percent to 486,000.
Total jobs were down an annual 1.4 percent, while unemployment was up 6.8 percent from a year earlier. Actual hours worked declined 0.1 percent to 73. 14 million hours, and was down an annual 1 percent.
The annual decline in jobs was led by a 19 percent plunge in self-employment, which has been falling from a peak in December 2011.
Otago had the lowest unemployment rate across the regions at 4.3 percent, with Southland at 4.6 percent and Canterbury at 4.9 percent. Northland had the highest rate at 9.5 percent. Auckland's unemployment rate improved to 7.2 percent, while Wellington's rose to 7.9 percent.
Youth aged 15 to 24 not in employment, education or training (NEET), a target demographic for the government, rose to 14.2 percent, the highest level since March 2011, though coming at the end of calendar year when programmes typically end.
The number of jobless people fell to 284,500 from 294,900 a quarter earlier, and was up from 261,300 at the end of 2011. The number of people discouraged from seeking working because they believe they lack the appropriate skills rose 2,400 to 10,100 in the three month period.
Underemployment, which counts those people in part-time work wanting more hours, fell to 111,000 from 113,300 in the quarter, and was up from 105,100 a year earlier.
New Zealand's unemployment rate is now the 14th lowest among developed nations, below Canada's 7.2 percent and above Israel's 6.7 percent.
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