Unemployment falls to nine-year low

Unemployment has fallen to a nine-year low, as the economy added thousands of new jobs at the end of 2017.

Statistics New Zealand said the unemployment rate had fallen to 4.5 per cent in the final three months of 2017, down from 4.6 per cent at the end of September.

It is now at its lowest level since December 2008.

The majority of economists who track the data expected that unemployment would actually tick up slightly, after conspicuously strong figures for the September 2017 quarter.

However, the latest figures showed the economy added another 12,000 jobs in the quarter, which, although well below the more than 50,000 new jobs in the September quarter, continues to outpace the number of new people entering the workforce.

The figures may have masked a softening in some parts of the labour force.

Statistics NZ said underemployment – a measure of people who are in part-time work but want to work more – rose by 7000 to 122,000, or 6.3 per cent, the highest rate of underemployment on record.

Underemployment is disproportionately affecting women, where the underemployment rate is 7.5 per cent.

The unemployment rate for women fell to 5 per cent, compared with 4 per cent for men.

Unemployment among Maori also fell to a nine-year low, but at 9 per cent is twice the rate of unemployment in the overall population.

Statistics NZ said the number of unemployed Maori dropped by 21.4 per cent or 8600 in 2017. Most of the drop came from lower unemployment in the 20-29 age group.

The strong market is still not translating into strong wage growth. Across both private- and public-sector workers, the labour cost index rose 1.8 per cent on a seasonally adjusted basis.

Part of the increase was related to the Care and Support Worker (Pay Equity) Settlement Act, which came into force in July 2017. Excluding the settlement, the increase would have been 1.6 per cent.