Unemployment drops sharply to 5.3%, near six-year low; kiwi dollar gains

Wednesday 3rd February 2016

New Zealand unemployment unexpectedly fell to near a six-year low in the final three months of 2015 as people left a labour market flooded by strong migration and as employers took on more workers. The kiwi dollar initially jumped almost half a US cent.

The unemployment rate fell to 5.3 percent in the December quarter from 6 percent three months earlier, according to Statistics New Zealand's household labour force survey. That's the lowest level since March 2009, and came in below economists' predictions for an unemployment rate of 6.1 percent. Employment grew 0.9 percent, slightly ahead of estimates, while the participation rate fell to 68.4 percent from 68.7 percent three months earlier.

"Although the number of employed people has risen, there was also growth in the number of people not participating in the labour market," Diane Ramsay, labour market and households statistics manager, said in a statement. "This has contributed to labour force participation falling for the third quarter in a row."

Record inflows of migrants have kept the labour force expanding over the past year, helping limit wage growth in a benign inflation environment, even as employers complain about the difficulty of finding staff.

The working age population expanded 0.5 percent in the quarter to 3.66 million, for a 2.3 percent annual increase. At the same time, employment grew 1.3 percent in calendar 2015 to 2.37 million, while unemployment shrank 6.7 percent to 133,000. The number of jobless people, which includes unemployed people of working age not seeking a job, rose 0.7 percent to 259,000 in the year.

The data comes ahead of Reserve Bank governor Graeme Wheeler's first public speech of the year, this afternoon, where he's expected to elaborate on adopting a bias for lower interest rates as low oil prices keep a lid on inflation.

The kiwi dollar rose as high as 65.42 US cents after the data was released, from 65.02 cents immediately before, and was recently at 65.16 cents.

The labour cost index, also released today, showed private sector ordinary time wage inflation rose at an annual pace of 1.6 percent in December, meeting economists' expectations, and more than the 1.5 percent pace recorded in the public sector. Wage inflation rose 0.4 percent in the quarter across all sectors. .

The quarterly employment survey, which rounds out today's labour data dump, showed private sector weekly earnings for full-timers rose 0.6 percent to $1,035.37, an annual increase of 3.4 percent and more than the 0.1 percent pace of consumer price inflation over the same period. Across all sectors, weekly earnings rose 1 percent in the quarter for an annual rise of 3 percent.

Average ordinary time hourly wages rose 0.3 percent in the quarter to $29.38, for a 2.1 percent annual increase. Average private sector hourly wages increased 0.2 percent in the quarter to $27.44 for a 2.5 percent yearly rise, while public sector wages advanced 0.4 percent to $36.53 - a 1.5 percent annual increase.

The household labour force survey showed professional, scientific, technical, administration and support services generated the biggest jobs growth in the quarter, rising 6.6 percent to 275,500. Construction work grew 3.1 percent in the quarter to 232,000, while manufacturing jobs increased 1.8 percent to 254,400. Agriculture, forestry and fishing jobs climbed 5.7 percent to 148,200.

Part-time jobs rose 2.5 percent in the quarter to 523,000, 0.6 percent below the same quarter a year earlier, while full-time jobs rose 0.6 percent in the quarter to 1.85 million, an annual increase of 1.9 percent.

The total number of hours worked increased 1 percent to 79.1 million in an average week for the quarter, up 2.1 percent on the year.

BusinessDesk.co.nz

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