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NZ's jobless rate unexpectedly rises to 5.2% in 4th qtr; kiwi drops

Wednesday 1st February 2017

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A large number of people entering New Zealand's workforce pushed the unemployment rate back above 5 percent but also meant the labour force participation rate reached an all-time high, data from Statistics New Zealand shows.

The unemployment rate rose to 5.2 percent in the three months ended Dec. 31  from a revised 4.9 percent in the September quarter, Statistics New Zealand said. Economists had been expecting the unemployment rate to ease back to 4.8 percent. The New Zealand dollar fell to 73.08 US cents from 73.38 cents immediately before the figures were released.

Employment grew 0.8 percent in the quarter to 2.51 million while the working-age population grew 0.5 percent to 3.76 million. The participation rate was an all-time high of 70.5 percent, While recent changes to methodology means comparisons with earlier periods aren't easy to make, the working-age population has been bolstered by record migration.

"The December quarter saw a large number of people enter the labour force," labour and income statistics manager Mark Gordon said in a statement."But while the number of people in employment has risen, so has the number of unemployed people." 

The retail trade, accommodation and food services industry was the largest contributor to employment growth over the latest quarter. This was followed closely by the construction and profession services industries, the government agency said.  Over the quarter the nation's largest city of Auckland had the highest job growth while the Gisborne/Hawkes Bay regional council area had the highest unemployment rate. 

New Zealand's swelling population also meant that any wage increases remained muted, adding to the challenges facing New Zealand's central bank. While inflation is finally back in the central bank's 1 percent-to-3 percent target band, the lack of wage inflation is one factor that will likely keep interest rates on hold this month and throughout this year.  

"Although employment has growth, the growth in wages has remained steady," said Gordon. 

Today's data show wage inflation remained muted, with the ordinary time private sector labour cost index increasing 0.4 percent in the quarter. On the year, the ordinary private sector labour cost index was up 1.6 percent. The index also rose 0.4 percent on the quarter and 1.6 percent on the year in the September quarter. Public sector wages rose 0.5 percent in the December quarter and 1.8 percent versus the same quarter a year earlier.  

According to Statistics New Zealand total annual wage inflation, which includes both the public sector and the private sector, was 1.6 percent higher on the year in the December quarter. Annual wage inflation has been 1.5 percent to 1.6 percent for the last seven quarters, it said. 

The figures showed total hours worked rose a seasonally adjusted 1.3 percent in the quarter to 85.3 million hours in an average week. They rose 6.7 percent on the year. 

The recently added underutilisation rate, which seeks to measure the potential labour supply, was at 12.8 percent up from 12.2 percent in September.  The increase came from more people being unemployed and more people actively seeking work but not currently being available to work. 

The quarterly employment survey, also released today, showed ordinary time private sector hours fell 0.3 percent in the quarter to $27.74 for a 1.1 percent annual gain. Ordinary time public sector wages rose 0.5 percent to $37.63 and were up 3.0 percent on the year. 

BusinessDesk.co.nz

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