NZ unemployment falls to 15-year low despite increase in workers

By NZPA

Tuesday 11th February 2003

New Zealand's unemployment rate fell to 4.9 percent in the December quarter -- a 15-year low -- while the numbers of people able to work rose.

Statistics New Zealand's Household Labour Force Survey, the country's official employment measure, showed a fall from 5.4 percent in the September quarter. The figure surprised on the low side, with a 5.3 percent unemployment rate expected.

At the same time, the country's working age population grew by 2.0 percent, or 59,100 people, partly because of a net gain in permanent and long-term migration of 30,000, Statistics NZ said.

New Zealand's unemployment rate was last below 5 percent in the March 1988 quarter, when it was at 4.8 percent.

The quarterly fall of 0.5 percent was driven by a drop in unemployment for people aged 20-29 years, traditionally a volatile age group.

Westpac chief economist Adrian Orr said it was a fantastic unemployment number.

Job ads, employment intentions and capacity constraints had all shown a clear demand in employment, but a fall in the workforce participation rate raised doubts.

"That's surprising in terms of what we have seen in terms of net inward migration," Mr Orr said.

The news dampens prospects of an imminent interest rate cut. Most economists expect the Reserve Bank to leave rates unchanged at its review on March 6.

Mr Orr said it would be the second half of this year before any cut and even then it was "a risk rather than the central scenario".

The Government had benefited from the timing of high commodity prices, a low currency, growing conditions, supply side shocks elsewhere in the world, and big growth in student numbers.

Longer-term, he said there was still a challenge to double the productivity growth to improve living standards.

Tasman/Marlborough/West Coast experienced the biggest rise in unemployment for the quarter, rising to 4.1 percent from 2.3 percent.

Other regions to see an increase in unemployment were Wellington, from 4.8 percent to 5.0 percent; Gisborne/Hawke's Bay, from 4.9 percent to 5.7 percent; Southland, from 3.7 percent to 3.9 percent; and Northland, from 8.3 percent to 8.5 percent.

Auckland's unemployment fell from 5.0 percent to 4.0 percent.

All ethnic groups experienced a fall in unemployment for the quarter. The rate of unemployment stood at 11.4 percent for Maori, 8.2 percent for Pacific peoples, 7.9 percent for "other", and 3.3 percent for Pakeha/European.

The number of people unemployed fell to 98,000, while the number of people employed rose 0.4 percent to an estimated 1.89 million.

The long-term unemployed made up a marginally greater proportion of the numbers unemployed, at 30.1 percent compared with 29.6 percent in the September quarter.

Full-time employment rose an estimated 0.8 percent to 1.46 million people, while part-time employment fell by 1.2 percent to 424,000 people in the quarter.

The labour force participation rate fell by 0.3 percentage points over the quarter to 66.3 percent, compared with the forecast 66.6 percent.

Compared with unemployment rates in other countries in the OECD, New Zealand ranks 10th, an improvement from 12th in the September quarter, with Switzerland leading at 2.5 percent unemployment.

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