A large number of people entering New Zealand's workforce pushed the unemployment rate back above 5 per cent but also meant the labour force participation rate reached an all-time high, data from Statistics New Zealand shows.
The unemployment rate rose to 5.2 per cent in the three months ended December 31 from a revised 4.9 per cent in the September quarter, Statistics New Zealand said. Economists had been expecting the unemployment rate to ease back to 4.8 per cent. The New Zealand dollar fell to 73.08 US cents from 73.38 cents immediately before the figures were released.
Employment grew 0.8 per cent in the quarter to 2.51 million while the working-age population grew 0.5 per cent to 3.76 million. The participation rate was an all-time high of 70.5 per cent, While recent changes to methodology means comparisons with earlier periods aren't easy to make, the working-age population has been bolstered by record migration.
"The December quarter saw a large number of people enter the labour force," labour and income statistics manager Mark Gordon said in a statement."But while the number of people in employment has risen, so has the number of unemployed people."
The retail trade, accommodation and food services industry was the largest contributor to employment growth over the latest quarter. This was followed closely by the construction and profession services industries, the government agency said. Over the quarter the nation's largest city of Auckland had the highest job growth while the Gisborne/Hawkes Bay regional council area had the highest unemployment rate.
New Zealand's swelling population also meant that any wage increases remained muted, adding to the challenges facing New Zealand's central bank. While inflation is finally back in the central bank's 1 per cent-to-3 per cent target band, the lack of wage inflation is one factor that will likely keep interest rates on hold this month and throughout this year.
"Although employment has growth, the growth in wages has remained steady," said Gordon.
Today's data show wage inflation remained muted, with the ordinary time private sector labour cost index increasing 0.4 per cent in the quarter. On the year, the ordinary private sector labour cost index was up 1.6 per cent. The index also rose 0.4 per cent on the quarter and 1.6 per cent on the year in the September quarter. Public sector wages rose 0.5 per cent in the December quarter and 1.8 per cent versus the same quarter a year earlier.
According to Statistics New Zealand total annual wage inflation, which includes both the public sector and the private sector, was 1.6 per cent higher on the year in the December quarter. Annual wage inflation has been 1.5 per cent to 1.6 per cent for the last seven quarters, it said.
The figures showed total hours worked rose a seasonally adjusted 1.3 per cent in the quarter to 85.3 million hours in an average week. They rose 6.7 per cent on the year.
The recently added underutilisation rate, which seeks to measure the potential labour supply, was at 12.8 per cent up from 12.2 per cent in September. The increase came from more people being unemployed and more people actively seeking work but not currently being available to work.
The quarterly employment survey, also released today, showed ordinary time private sector hours fell 0.3 per cent in the quarter to $27.74 for a 1.1 per cent annual gain. Ordinary time public sector wages rose 0.5 per cent to $37.63 and were up 3.0 per cent on the year.