6 Aug 2012

Unemployment rate not picked to drop before 2013

8:33 am on 6 August 2012

An economist is predicting the unemployment rate will remain high until at least next year.

The Household Labour Force Survey is published on Tuesday, and most economists are picking the unemployment rate to ease from 6.7% in the March quarter to 6.5% in the June quarter.

Westpac senior economist Felix Delbrook believes it will stay high until at least next year when the Canterbury rebuild gets under way; and he's also pinning growth on an expected construction boom in Auckland, where there is a housing shortage.

Mr Delbrook says a lot of the growth expected in the next year will be driven by the domestic economy and the construction sector.

He says the state of the labour market in the June quarter is likely to be clouded by a spate of unreliable data, as well as the changing relationship between unemployment and skills shortages.

Mr Delbrook says it's not known what's causing it, but regional and occupational disparities could be playing a role.

"In other words we're seeing skill shortages and rising wages in some occupations in some parts of the country, so in the South Island unemployment has tended to be quite a bit lower than in the North Island.

"We've also seen longer-term unemployment rise over the last two years, whereas short-term unemployment seems to have peaked."