Unemployment rate falls to nineyear low

NEW Zealand’s unemployment rate continues to fall, reaching a nineyear low in March of 4.4% and landing right on market expectations.

Unemployment in December was 4.5%.

ASB senior economist Mark Smith said given the enhanced focus of the labour market in the new Reserve Bank Policy Targets Agreement with the Government, it was encouraging to see few signs of quarterly volatility in the household labour force survey.

Survey volatility from labour market readings could potentially complicate matters for the Reserve Bank as it deliberated official cash rate settings. But so far, so good.

‘‘The key takeout from the March quarterly labour market report was the labour market has remained tight.’’

Wage inflation remained low and further increases in the minimum wage and the tight labour market were eventually expected to push wages higher.

ASB forecast the OCR to rise in August next year, he said.

Statistics New Zealand labour market and household statistics senior manager Jason Attewell said while most New Zealanders were familiar with the unemployment rate, the underutilisation rate was equally important.

It provided a broader picture of untapped capacity in the labour market.

The seasonally adjusted underutilisation rate fell to 11.9%, down from 12.2% in the December quarter.

There were almost 340,000 people with the desire and potential to work more, although that was still 5000 fewer than in December, he said.

Underutilisation included people who had a job but wanted to work more hours, those available to work but were not looking, or those looking for work but were not available to start within the next month.

That could include a parent wanting to start work once their child started school in the coming month or someone who had just finished high school but had not started looking for a job, Mr Attewell said.

The fall in underutilisation mainly reflected 9000 fewer people being underemployed, which included 8000 fewer women.

People who were underemployed were those in parttime employment and wanted to and were available to work more hours.

In March, the unemployment rate for men fell to 3.9% and for women, it fell to 4.9%. That compared with 4% and 5% respectively in December, he said.

Hours worked in March rebounded by 1.7% following falls in December and September last year. Annual growth was a ‘‘robust’’ 4.9%.

Annual employment growth at 3.1% remained above the stillstrong but moderating 2.2% yearonyear growth in the working age population.

Statistic NZ figures showed filled jobs, as measured by the quarterly employment survey, were up 22,400 for the year.

The majority of those jobs were in the professional, scientific, technical, administrative and support services, and the retail trade industries.

Those industries, along with accommodation, were also the key contributors to employment growth, as measured by the household labour force survey.

In the notoriously volatile regional figures, Otago had an unemployment rate of 4.7%, up from 4.5% in December.

The employment rate rose to 70% and the labour force participation rate rose to 73.5%.

Southland had an unemployment rate of 2.9% and Canterbury was on 3.5%.