NZ jobless rate may have climbed to 6.8% last quarter

Monday 1st February 2010

New Zealand’s unemployment rate probably rose in the fourth quarter to near its peak, as the ongoing impact of recession ensures surplus labour capacity and keeps a cap on wages growth.

The jobless rate rose to 6.8% in the final three months of 2009, from 6.5% in the third quarter, according to the median of 10 economists polled by Reuters. Forecasts ranged from 6.5% to 7.2%.

Unemployment is a lagging indicator for an economic downturn, being one of the last measures to pick up as growth returns. But the jobless rate may have climbed less severely than feared, with dire predictions of a rate above 7% this year having subsided. The central bank, which in December forecast unemployment peaking in the first quarter of this year at 6.6%, is expected to begin raising interest rates in April or June.

“We believe the labour market is set to stabilise/improve, but conclusive evidence of this will not be apparent until mid-year,” when the first-quarter data is known, said Khoon Goh, senior markets economist at ANZ Bank.

The signals are still mixed, he said in a note last week. “Anecdotally, we are receiving more stories of a pick-up on demand from the recruitment industry, and job ads recovered in late 2009.”

Still, job ads are still well below their 2007 peak and media reports have highlighted strong demand for any jobs that are offered, he said.

Economists expect the participation rate was unchanged from the third quarter at 68% and ANZ is forecasting a pick-up in hours worked since some companies chose to reduce hours in responses to the downturn.

The Household Labour Force Survey is scheduled for release on February 4. Tomorrow, Statistics New Zealand releases the Quarterly Employment Survey and Labour Cost Index.

QES ordinary time salary and wages in the private sector probably rose 0.4% last quarter, for an annual increase of 4%.

LCI ordinary salary and wages in the private sector rose 0.4% in the quarter for a 1.6% annual gain, according to the survey.

Businesswire.co.nz

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