Sharp fall in jobless rate to 10-year low

Unemployment has dropped to 3.9 per cent, the lowest level since the global financial crisis, causing the dollar to surge.

On Tuesday Statistics New Zealand revealed that the seasonally adjusted unemployment rate was 3.9 per cent in the three months ended on September 30, down from 4.4 per cent at the end of June.

It is the lowest unemployment rate since June 2008, when unemployment was 3.8 per cent.

The New Zealand dollar jumped half a cent against the US dollar on the news, to be buying US67.4 cents, the highest level in about three months, as the odds of an interest rate cut from the Reserve Bank dissipate.

The household labour force survey result was outside expectations, prompting Statistics NZ to point to other times when unemployment fell sharply. A survey of economists had expected the rate would show no change.

‘‘We know New Zealand has a small economy with a dynamic labour market, and large changes, both up and down, have happened before – in late 2012 and 2015,’’ Statistics NZ spokesman Jason Attewell said.

‘‘We also know labour market measures tend to lag behind other economic indicators, which have shown strong and widespread growth in 2018. We’ve seen population growth in the regions, reports of more job ads, high levels of migration and tourism, growing retail sales, and rising exports.’’

The drop came as the economy added 29,000 jobs in the threemonth period, with the number of unemployed falling by 13,000.

ASB chief economist Nick Tuffley said that, historically, the jobless survey was somewhat volatile, meaning there was a chance part of the fall would reverse when the December-quarter data were announced in February.

‘‘If we take [the figures] at face value, what is encouraging about it is it does fly in the face of what business confidence has been saying for the last year, which has been indicating businesses have been very circumspect full stop, but also very wary of hiring and investing in their own business,’’ Tuffley said.

‘‘As yet we haven’t seen any material signs coming through yet that weaker business confidence is impacting on the broader economy.’’

Finance Minister Grant Robertson said the rate was an ‘‘excellent result’’ in a post on Twitter. ‘‘The labour market is tight and there will be some fluctuation over time but this is another sign of success in the real economy.’’

Employment Minister Willie Jackson said: ‘‘There are now over 2.66 million New Zealanders in employment, which means 29,000 more people and families are engaged in earning since the last quarterly results.’’

National Party finance spokeswoman Amy Adams welcomed the fall, but said it meant firms were struggling to find workers, which was creating pressures.

‘‘It does fly in the face of what business confidence has been saying for the last year.’’ ASB chief economist Nick Tuffley