9 May 2013

Unemployment rate at three-year low

9:37 pm on 9 May 2013

Unemployment has dropped sharply, but questions remain over how long it will last.

Official figures show that nationally, the number of people out of work tumbled to a three-year low after firms created a record high number of jobs in the first three months of the year.

At first glance, the improvement in the labour market appears impressive.

Unemployment was down from 6.8% to an unexpectedly low 6.2% in the three months to March, with a large drop among those under 25 years old.

Some 146,000 people are out of work - the lowest level since March 2010. That also bucks the trend for a March quarter, with Statistics New Zealand saying that unemployment typically rises in this period.

Employment rose by 38,000, with more people in fulltime work - the biggest quarterly jump since the series began in 1986.

But when compared with a year earlier, the gains are much more modest, with employers adding just 8000 jobs.

The Household Labour Force Survey has been volatile in recent times, but economists say the economic recovery is patchy and joblessness might shoot up again next quarter.

Under-employment, which includes part-time workers wanting more hours also fell, as did joblessness among the young who tend to find it harder to get work when an economy is gradually recovering. Earthquake-hit Canterbury's labour market continued to improve.

Overall, Statistics New Zealand said it is a strong turnaround, but the labour market is yet to recover to levels experienced at the start of 2012.

The Council of Trade Unions says the Government could do a lot more to help people into work.

CTU secretary Peter Conway said 146,000 people are still without work and hopes there will be funding in the Budget on 16 May for investment in skills and industry training and community employment schemes.

Jobless figures 'still too high'

Westpac chief economist Dominic Stephens says the number of people out of work is still too high.

Mr Stephens said all of Thursday's indicators, including an increase in fulltime workers, are heading in the right direction - but at 6.2%, the unemployment rate in New Zealand is still too high and the economy would suffer no ill-effects if that rate fell.

Mr Stephens believed the country is in the early stages of a construction boom that will soak up a lot of labour over the next few years, although he warns that would largely be in Christchurch and Auckland.

BNZ economist Craig Ebert said the Reserve Bank's recent statements have shown it is starting to recognise that the economy is doing reasonably well and that is reinforced by the latest figures.

Mr Ebert said the Reserve Bank was expecting an unemployment rate of 6.7%, but it came out at 6.2% and the number of people in work was expected to rise by about 1% in the last quarter, but it actually rose by 1.7%.