NZ unemployment rate rises to 5.9% on weaker jobs growth   5 Aug 2015

Paul McBeth

NZ unemployment rate rises to 5.9% as jobs growth lags behind growing population

Aug. 5 (BusinessDesk) - New Zealand's jobless rate rose in the second quarter as the number of new jobs created failed to keep pace with an expanding working population driven by record migration. The kiwi dollar fell.

The unemployment rate rose to a seasonally adjusted 5.9 percent in the three months ended June 30, from 5.8 percent in the March quarter, according to Statistics New Zealand's household labour force survey.

Employment grew 0.3 percent in the quarter, falling short of expectations for 0.5 percent jobs growth in a Reuters poll of economists, and lagging behind the 0.7 percent expansion of the working age population for the first time since the September 2012 quarter. The participation rate fell 0.2 of a percentage point to 69.3 percent.

"Even though employment grew over the quarter, population growth was greater, which resulted in a lower overall employment rate for New Zealand," labour market and household statistics manager Diane Ramsay said in a statement. "Despite lower quarterly growth, this is still the 11th consecutive quarter of employment growth, making it the second-longest period of growth since the period between 1992 and 1996."

The New Zealand dollar dropped to 65.26 US cents after the data was released, from 65.41 cents immediately before.

New Zealand’s population has been bolstered by an increased inflow of net migration, with fewer kiwis leaving, more expats returning, and new migrants arriving. That flood of new labour has helped keep wage inflation tame as more people compete for jobs, while the accelerating economy has been able to soak up new workers.

The labour cost index, also released today, showed private sector ordinary time wage rates rose 0.5 percent in the quarter, accelerating fro a 0.3 percent pace in March. Annual private sector labour costs rose 1.8 percent, in line with economists' expectations. Public sector ordinary wages rose 0.3 percent in the quarter for a 1.2 percent annual rise.

Earlier this year, the Reserve Bank said it was monitoring wage and price-setting outcomes after consumer price inflation fell short of its expectations. The country's benign inflation environment and deteriorating terms of trade spurred governor Graeme Wheeler to start lowering interest rates in June, and last week he said the country's strong migration and labour force participation were among factors supporting the economy.

About 16 percent of private sector wages rose in the quarter, up from 11 percent in the March period, with about 55 percent of salaries up from a year earlier, compared to 55 percent three months earlier.

The quarterly employment survey showed ordinary private sector wages rose 1.2 percent in the quarter to $27.14, for an annual gain of 3.2 percent. Including the public sector, ordinary time wages rose 0.8 percent to $29.01 for a 2.8 percent annual increase.

The household labour force survey showed manufacturing was the biggest contributor to jobs growth in the year, rising to 266,300 people employed from 241,700 June 2014, and outpacing expansion in the construction sector, where 221,400 people were employed, up from 198,700. That's the first time construction hasn't driven annual jobs growth since December 2013.

Auckland reported the strongest annual employment growth, rising to 791,500 from 761,900 a year earlier, and accounting for about 44 percent of the nation's expansion. Canterbury jobs growth slowed, with 324,800 people employed, up from 321,600 a year earlier.

Auckland's unemployment rate fell to 6.3 percent in the June quarter from 6.9 percent in the March period, while Canterbury's increased 0.2 of a percentage point to 3.3 percent, still the lowest in the country. Wellington's unemployment rate improved to 5.6 percent from 6 percent in March. Northland had the highest unemployment rate at 8.6 percent, down from 9.9 percent.

Total hours worked fell a seasonally adjusted 0.4 percent to almost 78 million hours a week, and were up 1.1 percent on the year, the smallest annual increase since December 2012.

Full-time employment rose 0.4 percent in the quarter for a 2.9 percent annual increase, while part-time jobs gained a quarterly 0.8 percent, and were 3.3 percent up on the year. Of those part-time workers, 17.8 percent were underemployed, indicating they want and are available to work more hours.

New Zealand's 5.9 percent unemployment rate ranked it 12th equal with the Czech Republic among OECD nations, an improvement from its 13th equal ranking in the March quarter.

(BusinessDesk)

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