Jobless trumps as new jobs jump

The unemployment rate jumped to 5.2 per cent at the end of 2016, with new entrants to the workforce swamping the number of jobs created.

The quarterly household labour force survey showed that while the number of people employed rose by 19,000 in the final three months of the 2016, the overall labour force rose by 29,000.

The expansion in the labour force represents both arrivals from overseas, new people reaching the working age of 15, as well as people whose circumstances change which mean they are now actively seeking work or employed.

Economists had expected unemployment to drop to a fresh eight-year low of 4.8 per cent, but instead the number of unemployed rose by 10,000 to 139,000.

This pushed unemployment up to 5.2 per cent. Unemployment increased for both men and women.

‘‘While the number of people in employment has risen, so has the number of unemployed people,’’ Statistics New Zealand’s Mark Gordon said.

ASB chief economist Nick Tuffley said the number of jobs created at the end of 2016 was actually slightly stronger than had been expected, but there was a large lift in those looking for work.

Part of this was likely to be driven by strong migration, while part was a change in circumstances, he said.

‘‘It could be what we call the encouraged worker effect, which you generally get at times of sustained, strong employment growth, which is where people say ‘Hey, maybe it will be easy to get a job’ and they start looking a little bit more actively and then they start getting picked up in the figures.’’

ASB had expected unemployment to drop to about 4.5 per cent throughout 2017. Tuffley said the figures were likely to be revised following yesterday’s release, but any drop was likely to be ‘‘pretty gradual’’, with migration expected to stay strong.

ANZ said the rise in the unemployment rate was ‘‘clearly at odds with business surveys and anecdote that suggest that the labour market has continued to tighten’’.

Retail trade, accommodation and food services was the strongest growing employment category, followed by construction and professional services, Statistics NZ said.

Canterbury had the lowest unemployment rate of any region in New Zealand at 3.7 per cent, followed by Otago at 4 per cent and Nelson, Tasman, Marlborough and the West Coast at 4.1 per cent.

Gisborne and the Hawke’s Bay has the highest unemployment rate at 8.1 per cent, followed by Northland at 7.3 per cent and Taranaki at 6.8 per cent.

Auckland’s unemployment rate, at 5.1 per cent, was unchanged on a year ago, while unemployment in Wellington was 5.6 per cent, up 0.3 percentage points on the end of 2015.

Meanwhile wage growth continues to be slow, with wage inflation of 0.4 per cent in the final three months of 2016 and 1.6 per cent annually. This was just ahead of the 1.2 per cent rise in household inflation.

Annual wage inflation has been consistently running at 1.5 per cent to 1.6 per cent for almost two years.

For the second quarter in a row, wages in the public sector grew faster than in the private sector, at 0.5 per cent in the final quarter of 2016, compared with 0.4 per cent.