Joblessness tipped to fall to ‘record’ low

Economists are tipping Stats NZ will report that unemployment has fallen to a new record low when it releases jobs numbers for the first three months of this year on Wednesday.

Official unemployment fell to 3.2% in the December quarter while the ‘‘underutilisation rate’’, which is a broader measure of unemployment and underemployment, remained at 9.2%.

The Reserve Bank forecast in February that unemployment in the March quarter would flatline at 3.2%. But ASB forecast on Friday that Stats NZ would report official unemployment had dropped to 3%, which would set a new record low since comparable records began in 1986.

Infometrics is forecasting unemployment will have edged down to 3.1%.

The Omicron outbreak could impact the labour market figures in a number of ways.

The official unemployment rate is derived from a survey, rather than beneficiary numbers, and to count as unemployed people must report they would be available for work in the week they are surveyed. But some people wanting work might not have been available to start work that soon if they were sick or selfisolating, which could suppress the official unemployment rate.

Infometrics principal economist Brad Olsen said that could absolutely have an effect on the numbers.

Both Infometrics and ASB believe Stats NZ will report that the hours people worked fell during the quarter, even while unemployment also dropped, with ASB also predicting a small drop in the workforce participation rate, which is the proportion of people working or actively looking for work.

Economists are likely to be watching for evidence from Stats NZ on Wednesday that low unemployment is feeding through more strongly into higher wages.