Unemployment rate drops

By Phil Boeyen, ShareChat Business News Editor

Thursday 9th August 2001

There's more good news on the economic front with unemployment down to its lowest level in 13 years.

Figures for the June quarter put the seasonally adjusted unemployment rate at 5.2%. Statistics New Zealand says unemployment levels have continued to decline, down 3,000 or 2.9% in the latest quarter to 100,000.

The last time the figure was below 5.2% was March 1988, when it was 4.8 per cent. Unemployment reached a peak of 10.9% in September 1991.

Seasonally adjusted figures show the level of employment increased in the June quarter by 16,000 or 0.9% to an estimated level of 1.82 million.

Statistics New Zealand says labour market conditions continued to improve during the year, dropping by 12.3% from the June quarter 2000.

All ethnic groups showed declines in their unemployment rates during the year. The unadjusted unemployment rates for the June 2001 quarter were 11.9 percent for Mäori, 9.1 per cent for Pacific Peoples, 8.7 per cent for the 'Other' ethnic group and 4.0 per cent for European/Pakeha.

Unemployment was at its lowest in the Tasman/Nelson/Marlborough/West Coast region at 2.5%, followed by the Wellington and Southland regions at 3.2%. The highest unadjusted unemployment rate was 7.6% in the Bay of Plenty region.

Deutsche Bank says the new Household Labour Force Survey figures confirm the very strong Q2 labour market performance in last week's Quarterly Employment Survey (QES).

"On a regional basis, there was further evidence that the recovery is broadening to the urban areas. The Auckland region recorded particularly strong growth - employment in Q2 was over 6% higher than a year earlier," says senior economist, Darren Gibbs.

"The labour market remains very tight. The fall in the unemployment rate to 5.2% is consistent with the further surveyed measures of skill shortages and with the strengthening trend in wage growth reported both anecdotally and in last week's QES and Labour Cost Index."

Mr Gibbs says while the decline in long-term unemployment remains very encouraging and bodes well for New Zealand's longer-term economic health, it has not been sufficient to prevent an overall tightening of labour market conditions.

"Today's data supports our view that the RBNZ will give greater weight to the concrete evidence from strong domestic data and the consequent inflation risks, and therefore refrain from easing further on 15 August. With two further opportunities left this year to shift rates downward if needed, we see little imperative to ease policy at this point."

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