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NZ unemployment rate unchanged at 6 percent as participation swells to record

Wednesday 7th May 2014

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New Zealand's unemployment rate was unchanged in the first quarter as the country's participation rate rose to a record, with faster-than-expected jobs growth that was fuelled by increases in the primary, manufacturing and construction sectors.

The unemployment rate was unchanged at 6 percent in the three months ended March 31, according to Statistics New Zealand's household labour force survey, above the forecast 5.9 percent in a Reuters survey of economists. The participation rate rose 0.4 of a percentage point to 69.3 percent, the highest level since the series began in 1986, and ahead of the 68.8 percent forecast.

Employment grew 0.9 percent in the quarter, ahead of the 0.6 percent predicted, and was up 3.7 percent on the year. The number of hours worked rose 2.7 percent to a seasonally adjusted 78.16 million hours in the quarter, and were up an annual 3.3 percent.

"We're seeing more people in the labour market, with the participation rate surpassing the previous high in late 2008 before the downturn in the labour market," Diane Ramsay, labour market and households statistics manager at Statistics NZ, said in a statement. "The rise in participation is on the back of more people in work, while the number of people looking for work remains unchanged."

The New Zealand dollar weakened to 87.04 US cents from 87.24 cents immediately before the report was released at 10:45am.

New Zealand's economic growth is being spurred by high commodity prices and increasing building activity, prompting the Reserve Bank to embark on a tightening cycle to prevent inflation from accelerating.

Employment growth in the quarter was led by gains in the agriculture, forestry and fishing sectors, with the number of jobs rising to 156,800 from 149,500 in the December period, while manufacturing jobs rose to 246,000 from 254,000 and construction jobs were up to 196,100 from 185,000.

The labour cost index, which measures wage inflation, rose at a quarterly pace of 0.4 percent across all sectors and including overtime for an annual lift of 1.6 percent. Private sector ordinary time wages rose at a quarterly pace of 0.3 percent, ahead of the 0.2 percent increase in public sector pay.

Unemployment in Auckland rose to 7.3 percent from 6.3 percent in the December period, with a fall in employment and an increase in joblessness. Canterbury's unemployment rate slipped 0.1 of a percentage point to 3.3 percent, with a pick-up in participation and an increase in jobs.

Prime Minister John Key yesterday announced policy to provide a $3,000 sweetener to unemployment beneficiaries who secure full time work for more than 90 days if they relocate to the Canterbury region to help with the rebuild effort.

Under-employment fell, with 4.1 percent of part-time workers willing and able to take on more hours, from 5.3 percent in the December quarter.

The quarterly employment survey, also released today, showed ordinary time private sector wages rose 0.7 percent to $26.16 in the December quarter, and were up 2.9 percent on an annual basis. Public sector ordinary time wages rose 1.7 percent to $35.86 in the quarter, for a 1.8 percent annual increase.

 

BusinessDesk.co.nz

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