Unemployment at lowest level since 1988

By NZPA

Thursday 8th August 2002

New Zealand's unemployment rate continues to inch downwards, falling to a seasonally adjusted 5.1 percent, Statistics New Zealand said today.

The quarterly Household Labour Force Survey showed the unemployment rate was at 5.1 percent in the June quarter, slightly lower than the March rate, and just below market forecasts of a 5.2 percent figure.

That is the lowest unemployment rate since March 1988 when it stood at 4.8 percent.

Among OECD countries, New Zealand's unemployment levels have improved from 12th in the March quarter to tenth, equal with Britain.

Employment grew for the ninth consecutive quarter, following an expansion of the labour supply due to the intake of migrants and demand for labour.

For the quarter, seasonally adjusted employment was up by 0.6 percent, a rise of 11,000 workers. Annually, there was an increase of 3.1 percent or 57,000 people in employment, meaning there are now 1.878 million people in work.

This was down slightly on economists' expectations, who predicted a quarterly rise of 0.8 percent and an annual employment growth rate of 3.2 percent.

The workforce participation rate fell slightly to 66.7 percent from the previous period's revised 66.8 percent.

Full-time employment was the big winner, growing 1 percent over the quarter, while part-time work fell by 1.2 percent.

Due to the influx of migrants, the working age population has grown by 51,200 or 1.8 percent since June last year. But the number of people not in the labour force has also increased. Nearly a million people -- 988,000 -- considered themselves neither employed nor unemployed, up 10,000 (1 percent). They include child carers, retirees, students and patients. SNZ said these numbers had been boosted by a rise in those in education.

All ethnic group unemployment rates fell over the year, apart from Pacific Islanders. The unadjusted unemployment rates during the quarter stood at 11 percent for Maori, 9.7 percent for Pacific peoples, 8.5 for other ethnic groups and 3.7 percent for European/Pakeha people.

Economists said the tighter labour market was unlikely to impact on next week's Reserve Bank interest rate review.

"In terms of next week it's largely irrelevant. We still think that the Reserve Bank in the current environment will leave interest rates unchanged," Deutsche Bank economist Darren Gibbs said.

Further out, rate hikes were definitely on the cards however, he added.

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