NZ may need to brace for weaker job data - economist
An economist says New Zealand may need to brace for some weaker job data over the coming months due to weaker gross domestic product figures feeding into the labour market.
Official figures issued by Statistics New Zealand on Thursday show that unemployment fell to 6.9%, or 163,000 people, in the three months to December - mainly due to fewer dropping out of the workforce.
The participant rate fell sharply to 67.2%, with a jump in people studying or retiring.
But the Household Labour Force Survey also slowed employment dropped a seasonally-adjusted 1%, or 23,000, led by more women out of work.
ANZ Bank senior economist Sharon Zollner says it's clear that the labour market is weak, which the bank's job survey has been showing for sometime and job adverts have been flat to falling for well over a year now.
Ms Zollner says GDP flattened out over 2012, although there was a little bit of growth and the labour market tended to follow GDP about six months to a year later.
She says even when growth increases, employers delay taking on staff until they are convinced that growth is there to stay, or if the economy is weakening, employers hold onto their skilled staff for as long as possible.
Ms Zollner says for those sorts of reasons the labour market is a lagging indicator of the economy.
She says employers are making decisions based on the strength of the economy six months ago.
Ms Zollner says it would not be surprising to see labour force participation rate to increase again, which would mean the unemployment rate could go up again in the first quarter.
She says there has been a high degree of quarterly volatility in this survey recently.
But Council of Trade Unions secretary Peter Conway says there's always room for debate about the small trend issues.
He says in 2008 before the global financial crisis, about 90,000 people were unemployed in New Zealand, but there are now 163,000 people who are unemployed.
"While there may be debate at the margin that doesn't disguise the fact that the level of unemployment is about 70,000 people higher than what it was back in 2008."
Mr Conway says New Zealand's relative performance in terms of unemployment is bad - it is now 14th in the OECD, while several years ago it was fourth or fifth.
He says why New Zealand is worse off in terms of other countries is a policy question because there hasn't been as much effort put into addressing the unemployment problem.
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