Jobless total lowest for 9 years
But employment rate dip in June quarter to 66.7% surprises analysts
Unemployment is at the lowest level since 2008, new figures reveal. The unemployment rate fell to 4.8 per cent in the June 2017 quarter (down from 4.9 per cent in the March 2017 quarter) Stats NZ says — the lowest unemployment rate since December 2008. That was the start of the global financial crisis, when it was 4.4 per cent, and National had just been elected to office.
“In the June 2017 quarter, 3000 fewer people were unemployed,” labour market and households senior manager Diane Ramsay said.
Unemployed people are those who are available to work, and who had either actively sought work or had a new job to start within the next four weeks.
But the employment rate fell to 66.7 per cent ( 4000 fewer people employed) in the June 2017 quarter, down from 67.1 per cent in the March 2017 quarter. The drop in employment follows six quarters in which employment rose.
The unexpected dip in employment surprised market analysts who were picking growth to remain robust, prompting a sell-off in the kiwi dollar and firming up expectations for the Reserve Bank to keep interest rates on hold for longer.
ASB economists said employment growth was weaker than expected over the second quarter, which they said was the result of the labour force participation rate dipping.
“The softness in employment growth is surprising, especially given employment indicators were robust over the quarter,” they said.
“This release reinforces the idea that the RBNZ will be in no rush to raise interest rates any time soon,” they said.
New Zealand's labour market has been robust over the past 18 months as firms have been able to create new jobs for an expanding population in an economy underpinned by record tourism, strong migration, a construction boom and more recently the recovery in global dairy prices.
ASB now expects the Reserve Bank to keep its official cash rate at 1.75 per cent until February 2019, compared with its previous prediction of a November, 2018, rate hike.
New Zealand’s two-year swap rate dropped 5 basis points to 2.17 percent and the local currency fell to 74.27 US cents as at 11.50am from 74.67 cents immediately before Statistics New Zealand released the figures.
Economists polled by Reuters had been expecting growth of 0.7 per cent, extending the run of gains into a seventh quarter. The participation rate dropped to 70 per cent from 70.6 per cent and missed forecasts for a rate of 70.7 per cent.
New Zealand’s working-age population increased 0.5 per cent in the June 2017 quarter (up 20,000 people) to 3,801,000. This is the first quarter since September 2015 that employment growth was below population growth.
“The unemployment rate for women fell to 4.9 per cent, with 10,000 fewer women unemployed — the lowest it’s been since March 2009,” Ramsay said.
In contrast, the male unemployment rate rose to 4.7 per cent (7000 more men unemployed).
In the year to the June 2017 quarter the labour cost index increased 1.7 per cent, up from 1.6 per cent in the year to March 2017.
The recent minimum wage increase contributed to wage inflation in the latest quarter.
Changes to carers’ wages from the Care and Support Worker (Pay Equity) Settlement Bill (2017) took effect on 1 July 2017, the start of the September 2017 quarter.