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Unemployment rate rises to 5.7% but labour force participation rate reaches record high of 69.7%

Unemployment rate rises to 5.7% but labour force participation rate reaches record high of 69.7%

The unemployment rate rose to a seasonally adjusted 5.7% in the December quarter from 5.4% from the September quarter, Statistics NZ says, with an additional 8,000 people unemployed over the quarter.

The increase is a surprise given the consensus of economists' expectations was for a slight fall in the unemployment rate to 5.3%.

In the year to December 2014 quarter, the unemployment rate fell 0.3 percentage points from 6.0%.

Meanwhile, the labour force grew by a seasonally adjusted 36,000 in the December quarter, the biggest increase since the Statistics NZ series began in March 1986.

The labour force participation rate therefore rose 0.7 percentage points to 69.7% during the quarter.

That's the highest participation rate since the series was launched, topping the revised previous high of 69.3% in the March 2014 quarter.

"The rise in the labour force reflected continued population growth and fewer people not being in the labour force. Over the latest quarter, the strong rise in employment (up 28,000 people) did not keep up with the record number of people entering the labour force. Therefore, the number of people unemployed, and the unemployment rate, also increased," Statistics NZ says.

The number of people employed increased by 80,000, or 3.5%, last year in seasonally adjusted terms.

"Although the unemployment rate rose in the December quarter, conditions in the labour market have actually remained firm, and are consistent with the domestic economy continuing to grow at a robust pace," Westpac senior economist Satish Ranchhod said.

"While employment has been increasing, wage inflation has been soft. The private sector LCI (all salary and wage rates) increased by 1.8% over the past year - as expected and a very modest result in the context of an economy that’s been growing at a solid pace for some time now."

"Overall, today’s data adds to the more general picture of a solid domestic economy but subdued inflation. This supports our expectation that the Reserve Bank will keep the Official Cash Rate (OCR) on hold for some time," said Ranchhod.

ASB senor economist Chris Tennent-Brown said the key surprise in the data was the "turbo-charged" increase in the supply of labour, with the labour force growing by 36,000 in the December quarter.

"That is the largest level increase on record, and why we expected the unemployment rate to remain roughly steady despite anticipating strong employment growth. The surprise within the release came from a spike in the labour participation rate to a record level. Labour force participation often goes hand in hand with strong employment growth," Tennent-Brown said.

"And the strong net flows of recent migrants featured a lift in 20-34 year olds, a group likely to be highly motivated to work. That might go some way to explaining the quarter’s participation rate spike, though these spikes often reverse, so we are wary of reading too much into it."

Tennent-Brown said there were no implications for ASB's view that the Reserve Bank will hold the OCR at 3.50% for the foreseeable future.

"Although in the near-term the risks are for a lower OCR, we don’t judge the Reserve Bank’s inflation outlook has shifted down that far. The labour data reinforce other indicators that Q4 experienced solid growth. The wage implications are fairly neutral, with tiny signs of a lift in pressure from low levels negated by this quarter’ spike in the supply of labour."

 

Unemployment rate Dec 2013 Dec 2014
(not seasonally adjusted) % %
     
Northland 9.0 8.0
Auckland 6.3 5.7
Waikato 6.7 6.1
Bay of Plenty 9.3 5.7
Hawkes Bay / Gisborne 7.3 7.8
Taranaki 5.7 4.8
Manawatu / Whanganui 5.7 9.0
Wellington 6.0 5.7
     
Nelson / Marlb / West Coast 4.2 6.1
Canterbury 3.4 3.5
Otago 4.4 4.2
Southland 5.7 3.4
     
New Zealand 5.9 5.6

 

Participation rate Dec 2013 Dec 2014
(not seasonally adjusted) % %
     
Northland 60.9 63.8
Auckland 69.2 69.9
Waikato 68.8 69.9
Bay of Plenty 65.5 68.2
Hawkes Bay / Gisborne 66.0 67.1
Taranaki 70.4 70.3
Manawatu / Whanganui 64.2 64.1
Wellington 73.4 72.5
     
Nelson / Marlb / West Coast 67.8 68.7
Canterbury 71.5 72.9
Otago 72.0 72.8
Southland 73.7 73.5
     
New Zealand 69.3 70.1

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7 Comments

"While employment has been increasing, wage inflation has been soft. The private sector LCI (all salary and wage rates) increased by 1.8% over the past year - as expected and a very modest result in the context of an economy that’s been growing at a solid pace for some time now."
 
Hmmm- latest nominal NZ GDPE registers an annual growth rate of 7.6232%, thus confirming the returns to capital must be outstripping those to employed labour. The deflation cycle will  be with us until the division of income is rebalanced. Currently it remains a case of ‘To those who have, more is given’

Here's what Labour leader Andrew Little has to say;
Kiwis are finding it even harder to get good jobs that pay a decent wage showing National can’t make the economic recovery deliver for all New Zealanders, Labour Leader Andrew Little says.
“This is a jobless recovery. The economy is growing but unemployment is increasing. There are 38,000 more people unemployed than there were when National got into office. That shows there is something seriously wrong with the way National is managing the economy.
“New Zealand has fallen to tenth on the OECD unemployment rankings. That’s not good enough. Labour’s goal is to ensure New Zealand has the lowest unemployment rate in the developed world.
“Kiwis have done it too tough for too long. They want to see the economic recovery shared across the country, by all New Zealanders.
“National doesn’t have the solutions to create the good jobs Kiwis need. John Key and Bill English have run out of ideas.
“Jobs provide more than economic security – they are a source of pride and confidence. Labour gets it.
“Our primary drive is to create good jobs for Kiwis and we know how to do it. By backing small business to innovate, grow and hire more staff we will make sure New Zealanders across the country can get into work.
“Labour has put growing businesses and creating jobs at the head of its agenda. Over the next two years we will develop a programme which puts the small business sector at the centre of a long-term economic plan to create jobs for Kiwis,” Andrew Little says.

And here's Tertiary Education, Skills and Employment Minister Steven Joyce;
The latest labour market data shows continuing strong employment growth with 80,000 more jobs added to the New Zealand economy in the last year.
Today’s Household Labour Force Survey shows employment was up by 1.2 per cent – 28,000 people – in the December quarter and up by 3.5 per cent in the last year.
“The NZ economy is continuing to crank out strong job growth in this latest survey,” Tertiary Education, Skills and Employment Minister Steven Joyce says.
“The other striking element in this jobs report is the record high participation in the labour market of 69.7 per cent. This participation rate increase means that unemployment rises slightly to 5.7 per cent despite the strong job growth.”
The largest regional contributors to growth over the year were Auckland with an increase of 22,300 jobs, Waikato with an increase of 17,400 jobs, Canterbury with an increase of 15,800 jobs, and the Bay of Plenty with an increase of 15,600 jobs.
“It is good to see broad-based job growth continuing in a range of different regions and industries around the country,” Mr Joyce says.
Other highlights include:
·         Strong growth in wages with hourly wages up 2.6 per cent over the year, well ahead of inflation of 0.8 per cent
·         The female employment rate (60.4 per cent) increasing to the highest level since the series began
·         A continuing good story for Maori and Pasifika peoples, with 10,400 more Maori in employment over the year, and the unemployment rate for Pasifika people falling 2.5 per cent over the year
·         The North Island unemployment rate steady at 6.2 per cent while the South Island unemployment rate grew from 3.4 per cent to 4 per cent
·         The NEET rate for youth aged 15-19 grew slightly to 7.7 per cent while the NEET rate for youth aged 20-24 fell to 14.5 per cent.
“New Zealand continues to fare better than most of the OECD since the Global Financial Crisis.  The average unemployment rate across the OECD is currently at 7.2 per cent,” Mr Joyce says.
“The Government is continuing to focus on economic policies that encourage business investment right across New Zealand. It is only when businesses have the confidence to invest that we achieve the sort of job growth that we are now seeing in the New Zealand economy.”

If you torture the data long enough it will confess to anything.

Or if they just ignore the factual data they don't like

You can't grow quality employment or businesses, without consumer demand - and by that I mean cash - to pay for it.    

Also remember employee spending is Wage less PAYE.

and with councils wanting to steal by volume more money... where's all this new money coming from?

Not from dairy sector... when they had some cash coming into the country RBNZ immediately put up -everyones- debt servicing cost to soak up that cash going into the economy.

so where are the consumers getting the cash to pay for this new quality job boom?
And it has to be spendable cash, otherwise the smart will just invest it (which won't create sales revenue)

"National can’t make the economic recovery" no growth eh? well neither will Labour. 
la la land, but then so is the voter.