Unemployment rate surprises again - with drop to 4.7%

Statistics New Zealand says the unemployment rate dropped to 4.7% in the March quarter from 4.9% in December - beating market expectations

5th May 21, 11:06am by David Hargreaves

New Zealand's amazingly resilient employment market has surpassed all expectations again.

Statistics New Zealand says the unemployment rate in the March quarter fell to 4.7% from 4.9% in the December quarter.

The new figure beat the forecast of the Reserve Bank, which was for a 5% rate and also came in under many bank economists' forecasts.

Remember also that the December figures were much stronger (IE lower unemployment figure) than had been expected.

The latest unemployment figure came on the back of stronger than expected growth in employment - 0.6%

The participation rate rose to 70.4% from 70.2%.

However, the seasonally adjusted 'underutilisation rate' increased to 12.2%, up 0.4 percentage points quarterly and 1.8 percentage points annually.

Over the year, 56,000 more people were underutilised – equal numbers of whom were men and women – bringing the level up to 366,000, Stats NZ said.

The NZ employment market has continued to defy expectations earlier last year of a massive surge in unemployed numbers, helped no doubt by the massive stimulus and measures such as the wage subsidy.

It now looks at though the peak unemployment in this cycle could prove to be the 5.2% rate recorded (revised) in the September quarter.

Women were disproportionately affected by the job losses earlier last year.

But in the latest quarter Unemployment rates for men and women converged at 4.7%, as the male rate rose from 4.5% last quarter and the female rate fell from 5.3%.

"There have been some gains in labour market outcomes, especially for women, over the past two quarters. However, annual changes indicate the labour market still hasn’t returned to pre-Covid-19 levels for men or women," Stats NZ's work, wealth, and wellbeing statistics senior manager Sean Broughton said.

There was slight wage growth during the period too.

The Labour Cost Index increased 1.6% in the year to the March 2021 quarter, with wage inflation remaining steady from last quarter. This is the first quarter since the December 2019 quarter where annual wage inflation has not slowed.

"Typically, March quarters see more muted wage inflation but this quarter we saw modest wage growth as New Zealand continues to have travel restrictions and businesses aimed to retain and attract staff," Broughton said.

Westpac acting chief economist Michael Gordon said the unemployment result reinforces the sense that the New Zealand economy "is past the worst of the Covid-19 shock, and that the unemployment rate of 5.2% in the September quarter last year will prove to be the (surprisingly low) peak in this cycle".

"The result was better than our forecast of a flat outturn, and the Reserve Bank’s forecast of an increase to 5.0%. The implication is that while we’re still below what the RBNZ would consider to be ‘maximum sustainable employment’ according to its mandate, the gap is gradually narrowing."

Unemployment

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Source: Statistics NZ

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58 Comments

by Yvil | 5th May 21, 11:13am 1620170026

Adrian Orr in shock announcement:
"The NZ economy has recovered from Covid much better than anticipated, therefore we are returning the OCR to the pre-Covid level of 1.00 %"

by Brutus Iscariot | 5th May 21, 9:25pm 1620206754

That would be amazing.

by AKLCrusader | 6th May 21, 8:50am 1620247857

He's going to have to go up more than that to slow the rampant price inflation on everything that's about to hit the market.

by sadr001 | 6th May 21, 9:30am 1620250232

His new house price stability mandate will prevent him from being able to raise interest rates. The government added a multiplier effect to the effect of interest rates on prices with their removal of tax deductibility of interest. (Previously tax was a dampening factor on the effect of interest rate moves)

by youngdumbandbroke | 5th May 21, 11:21am 1620170476

We need private vs public sector figures

by rastus1 | 5th May 21, 11:40am 1620171642

Id like to see total benfit spend (adjusted for Nat Super). That will really tell the story.

by David Chaston | 5th May 21, 11:56am 1620172582

Work it out from here. The 2021 data will be added after the Budget.

by rastus1 | 5th May 21, 12:20pm 1620174035

Thanks..so up from $25 to $40 Billion. Chuck in all those extra billions in bank created mortgage cash = rockstar.
Seems this is more a sugar rush than anything of substance or sustainable...or am I mistaken?

by youngdumbandbroke | 5th May 21, 12:23pm 1620174232

Sustainable is a word I don't think any bureaucrat in this country actually understands

by morepork | 5th May 21, 1:51pm 1620179481

That $40 B includes $12 B for the covid subsidy that hopefully won't be needed again in the near future. Still a $3 B increase: 1 B NZ super, 0.7 B accomodation supplement, 0.5 B for the regular benefits. As always NZ super is the lion's share of the social development spending, trying to reign in the rest isn't going to solve that.

by rastus1 | 5th May 21, 2:05pm 1620180351

yes it does however the context of this is unemployment level. The overall stimulus through the benefit system and the billions in mortgage debt are the drivers of this artificial good news job story. Sugar hits that will fade.

by morepork | 5th May 21, 2:13pm 1620180790

In theory that's the point of stimulus right? To help lessen the troughs in the economic cycle. Let's see if it's worth it this time.

by morepork | 5th May 21, 2:16pm 1620180991

Those numbers are really interesting. Estimate of 2.6 B in the 2020/2021 year on accomodation assistance. With about 1 million rentals that's a 2,500 subsidy per property to landlords. Add on to that the GST exemption for rent which is probably another 3k+/year/property. Don't know why they're so upset about losing mortgage interest deductions.

by Takere | 5th May 21, 11:36am 1620171418

"However, the seasonally adjusted 'underutilisation rate' increased to 12.2%, ..." Meaning, the 'real' unemployment rate has increased to 12.2% from 11.8% last quarter!

by Rosenstein | 5th May 21, 11:40am 1620171603

I work 0 hours per week. - unemployed.
I work 1 hour per week - employed.
I work 0 hours per week and haven't for a year - not unemployed.

by Advisor | 5th May 21, 12:01pm 1620172887

You can't look at the unemployment rate in isolation - the other figures give a better picture overall.
If the respondent working 1 hour per week classified as employed wanted more hours, they would be classified as 'underutilised'.

Also, those of working age not looking for work can be ascertained with the labour participation rate (i.e. 100-70.4 = 29.6% of NZ's working age population neither working nor actively looking).

by mikekirk29 | 5th May 21, 11:41am 1620171668

Please could you confirm what Stats NZ defines as FT work?And what hours does a person have to be working to be classified as "in employment"

by kiwimm | 6th May 21, 2:39pm 1620268781

https://www.stats.govt.nz/methods/guide-to-unemployment-statistics-thir…

by middleman1 | 5th May 21, 11:52am 1620172337

The supply of overseas 'students' and those coming in through other work visa scam channels dries up and unemployment falls to unexpectedly low levels. Could there be a connection ? Might employers be having to actually solicit and attract labour instead of lazily leaning on government to keep those plane loads of low wage slaves flying in ?

by fortunr | 5th May 21, 12:01pm 1620172864

I was wondering exactly the same.

by Advisor | 5th May 21, 12:13pm 1620173638

Kris Faafoi said earlier this week that the Productivity Commission inquiry into our long-term immigration settings won't be concluded until April 2021, so policy changes in response to the findings won't happen till late next year.

However, some immediate changes are to be announced in the 'coming weeks' that are intended to to tilt the balance away from low-skilled work, by attracting high-skilled migrants and meeting genuine skills shortages . This should be interesting!

by JustAnOpinion | 5th May 21, 1:15pm 1620177346

Yes its reading comments like this that really makes the day drag lol! Fancy wanting immigrants who can actually add value to our economy. Such innovation in government! For the love of God what was the previous balance??

by middleman1 | 5th May 21, 2:02pm 1620180152

Previous policy of all governments from Clark onwards was to flood NZ with as many necessary to create the illusion of genuine economic growth. Faafois review is to 'tilt the balance away from low-skilled work'. I'm confused. Wasn't that what the skills based points system is already supposedly designed to do ?

by KBKIWI | 5th May 21, 12:04pm 1620173052

what are the 21,000 "unavailable jobseekers" ?

by pacifica | 6th May 21, 2:15pm 1620267332

Mostly people with disabilities. Employers will discriminate against them, often boldly stating it directly knowing any public outcry is more likely to punish the person looking for work with more employers also opting not to hire them (stating not the right fit for role even when applying for entry level role with wealth of experience), not the other way around. So many in tech roles pushed out of the industry with statements from employers openly admitting the discrimination against them. Just not worth the risk though taking up a case when the evidence requirements mean you need to be filming and recording every conversation and interview without permission (creating a privacy mire) and the case itself more likely harming chances at future employment in a tight knit industry.

by colinchch | 5th May 21, 12:03pm 1620173016

More details here https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-r…

by Jonny.Foe | 5th May 21, 12:05pm 1620173139

So, we now have one full-time job in NZ for every two working age people. One in three working age people are not earning a wage at all. There are 135,000 people unemployed. There are 300,000+ workers who want more hours and greater security of income. But, at least the number of people who can be bothered to register as being unemployed has gone down by 0.2%.

by DaveRennie | 5th May 21, 12:14pm 1620173650

4.7 % unemployment rates is 135,000 people excluding sickness and disability. so why cant these people do the jobs that have traditionally gone to immigrant workers. If people refuse to work then refuse the benefit.
people are screaming out for workers and at $20 per hour, is it really that bad.
The graph is typical of how governments shape B.S into a positive.

by Jonny.Foe | 5th May 21, 12:57pm 1620176228

In the real world, there is a huge mismatch between people wanting to work and the amount, type and location of work available. For example:

- There are 25,000 to 30,000 job vacancies in NZ. Yet, there are 135,000 people actively seeking work, another 250,000 people who want more hours, and hundreds of thousands of people not in the labour market who would be tempted back by the right job opportunity. Do the Math
- The kind of jobs available are often poorly suited to the people looking for them. If you collect your kids from school in Hamilton at 3:30pm, or look in on your elderly mother a few times a week, you can't be toiling in the vineyards in the Hawkes Bay and sleeping in a dormitory for $20 per hour. This isn't laziness - it literally makes zero sense to swap poverty on benefits with your family, for poverty with hard work in a field without your family

Our economic model relies on having a decent stock of desperate, unemployed people on standby. This is how wages and working conditions are kept low. Economists even argue that this 'buffer stock' of unemployed people is absolutely necessary to control inflation (idiots). Anyway, What those who benefit from this model want everyone to think is that people are unemployed because they are lazy. Don't fall for it. Be a human.

by mikekirk29 | 5th May 21, 1:07pm 1620176829

excellent stuff

by Kate | 5th May 21, 4:12pm 1620187928

Yes, second that.

by middleman1 | 5th May 21, 1:11pm 1620177086

Most vacancies are in the main centres. No vineyards there. Thousands find ways to fit in their domestic responsibilities around jobs. Many employers will accommodate these arrangements for good workers.

by redcows1 | 5th May 21, 1:47pm 1620179226

Well said.
"sleeping in a dormitory for $20". had to laugh at that, nailed it.

by middleman1 | 5th May 21, 1:06pm 1620176791

Dave. Friend of the family lost their full time modestly paying job due to covid shutdowns so went on the benefit. She's an industrious person who wants to work so unsurprisingly has found something and back in the workforce. But she was intrigued that her all benefits combined when on welfare was just $100 less per week less than when working. She said that not having to get up to go to work was great and she can see why many choose it as a lifestyle option. I haven't fact checked her data but if correct it's not surprising that we still have a solid block of 'unemployed' at a time when employers are complaining about shortages of workers.

by mikekirk29 | 5th May 21, 1:08pm 1620176881

" Many"

by middleman1 | 5th May 21, 1:13pm 1620177230

Sure. Obviously so if tens of thousands of vacancies are unable to be filled by employers. Especially in the larger centres.

by Nzdan | 5th May 21, 1:45pm 1620179143

I posted this on here the other day. A screenshot of someone's WINZ entitlements page they posted on Facebook, one of two people who actually shared. Solo mums of 4 raking in what someone who earns a $78k salary does every week.

https://ibb.co/dDDr9bk

by morepork | 5th May 21, 4:01pm 1620187260

On 78k/year with 4 kids you'd be getting >400/week in family tax credit, in work tax credit and best start tax credit.

Even on 30k/year with 4 kids you'd make marginally more money working, with ~500/week after tax from your job + ~700/week in government top ups

by Kate | 5th May 21, 4:37pm 1620189473

Yes, it's funny how misunderstood our benefits/tax transfer system is - folks that moan about the unemployed - seem to generally ignore/not realise that the employed get all those benefits/tax transfers (aside from the Sole Parent support line) as well.

by Tom Valen | 5th May 21, 4:52pm 1620190329

Righto, so you accept that there are a lot of people are are net 'takers' from the state, while others without kids make less than them and still pay their fair wack of tax.

by Kate | 5th May 21, 5:32pm 1620192768

What I do accept is that our costs-of-living are too high in comparison to our wages. And that's primarily a failure of government to regulate well - and that's primarily because they've been stuck in a neoliberal, globalist ideological quagmire.

Start with #rentcontrolsnow as a means to regulate the single largest COL expense and then take it from there in terms of climbing out of the tax transfer muck.

by Jonny.Foe | 5th May 21, 9:10pm 1620205812

I think you have to be earning more than about $90k to be a net 'giver' to the state. But that is a crap measure for all kinds of reasons. Firstly, most people who earn decent money grew up being supported by the State - schools, healthcare, etc. Secondly most wealthy 'contributors' make their money from the labour or rent of other people, who are heavily subsidised by the State.

I would argue that if people are sick of paying 'more than their share', they should move to somewhere like Afghanistan or Bangladesh where they can live on their wits and get super rich without paying taxes.

by Kate | 5th May 21, 4:23pm 1620188587

But what does that say? It all comes down to whether she was able to live comfortably; without using savings or going into debt with $100 less per week. And "all the benefits combined" also tells a story - why can't we just have a single unemployment benefit that meets all an individuals basic needs. A single person (not living at parents home) Job Seeker (unemployment) benefit is $258.50 after tax per week. You can't be implying that this person was living comfortably on that?

by JustAnOpinion | 5th May 21, 1:25pm 1620177922

As a matter of comparison (noting that there are many, many differences in social equity) in Thailand you can get an unemployment benefit equal to 50% of your average daily wage in the highest paid three months in the nine months before unemployment. It is paid for up to 180 days in any calendar year; if voluntarily unemployed, 30% of the insured's average daily wage is paid for up to 90 days in any calendar year. The benefit recipient must check in once a month and must take a suitable job if offered.

The unemployment rate for Thailand was 1.86% in the October-December quarter, down from 1.90% in the September quarter. The rate hit an 11-year high of 1.95% in the June quarter.

https://www.ssa.gov/policy/docs/progdesc/ssptw/2016-2017/asia/thailand…
https://www.reuters.com/article/us-thailand-economy-jobs-idUSKBN2AN11L

by Kate | 5th May 21, 4:46pm 1620189961

In Montana, they're paying you a one-off 'bonus' lump sum to get you off the unemployment benefit. And they've cancelled the Federal Government's COVID unemployment top up. Bizarre situation;

https://apnews.com/article/montana-coronavirus-pandemic-health-governme….

by pacifica | 6th May 21, 2:20pm 1620267613

Correction that includes those with severe illness and disability. MSD puts a lot of disabled people on jobseeker or no support at all. Even when doctors & specialists provide certificates of severe disablement for more than 2 years MSD will ostracise and try to weasel out of disabled rights any way possible. Many disabled and ill people would love to have work as well but even though they have experience and have been looking for work for years employment discrimination is very very common in NZ. Better to employ an unskilled immigrant than a skilled experienced person with disabilities the thinking goes, (it happens even more in the public sector as well).

by Tom Valen | 5th May 21, 12:40pm 1620175223

That's the employment mandate fulfilled, time for an interest rate rise.

by Squishy | 5th May 21, 12:45pm 1620175546

I like to look both at unemployment rate and incomes growth to get a sense of quantity and quality of an economic recovery.

Fortunately in this case the sector hardest hit, tourism, tended to be a lower wage sector so getting wage growth back on-track will likely be easier.

by Advisor | 5th May 21, 1:27pm 1620178066

The government's aim for international tourism in the post-COVID world is for it to be a low-volume, high-value industry makes sense here.

Fewer businesses that can afford to pay decent wages by raking in higher margins through the sale of 'costly experiences' to rich tourists seems to be the ideal scenario here.

by middleman1 | 5th May 21, 2:11pm 1620180663

It's hollow politicking from Nash. He'll act the populist tough guy by issuing new regs for freedom campers, extract more cash from tourists at the border to pay for national park services but beyond that his options to regulate categories of tourists are limited. Was in Queenstown coupla weeks ago, developers down there don't seem to believe teeming mass tourism is going to be curbed any time soon.

by HeavyG | 5th May 21, 1:17pm 1620177455

How much of the $16.3 billion paid in NZ super is going to multi millionaires I wonder.

by Nzdan | 5th May 21, 1:46pm 1620179200

"RAH RAH RAH I PAID MY TAXES ALL MY LIFE RAH RAH RAH"

by GV 27 | 5th May 21, 2:25pm 1620181524

Pay it out at a higher rate to people who have never owned investment property and had all their income taxed at source IMO.

by Carlos67 | 5th May 21, 1:21pm 1620177683

Wow you can create any narrative you want from those figures. Love it how you just create new categories so more and more people actually get excluded from the real unemployment figure. The result is you can claim its going down when its actually going up.

by rjn1 | 5th May 21, 1:49pm 1620179368

Sorry to harp on, but 5% is not the same as 5.0% (signalling degree of accuracy, 5% = 4.5-5.4%). Michael Gordon knows the difference.

by Ocelot | 5th May 21, 3:28pm 1620185322

Still 1 out of 20 in the workforce unemployed. Sounds like those orchards aren't paying enough to encourage people to take up the fruit picking, pruning etc.

by CWBW | 5th May 21, 4:19pm 1620188396

Great news for rents and property prices. This year may be a tiger!

by Tom Valen | 5th May 21, 4:53pm 1620190402

Great for rents? Sadist!