Unemployment drops 0.4pc from 13-year high

Photo / NZ Herald

New Zealand's unemployment rate fell from a 13-year high in the last three months of 2012 as people stopped looking for work and the participation rate shrank to its lowest level in almost nine years.

The unemployment rate fell 0.4 of a percentage point to 6.9 per cent in the December quarter, as the number of people leaving the workforce fell faster than the number of jobs available, according to Statistics New Zealand's household labour force survey. Economists were picking a headline rate of 7.1 per cent in a Reuters survey.

The participation rate fell a record 1.2 percentage points to 67.2 per cent, the lowest level since September 2004, while employment shrank 1 per cent. Economists were expecting a participation rate of 68.5 per cent and quarterly jobs growth of 0.4 per cent. The number of people not in the labour force climbed 3.8 per cent in the quarter.

"We're seeing fewer people working and looking for work, and more people outside the labour force," industry and labour statistics manager Diane Ramsay said in a statement. "More younger people are solely in study and more older people are entering retirement."

The New Zealand dollar rose to 84.32 US cents from 84.20 immediately before the report was released.

The figures come after the quarterly employment survey showed a pick-up in total filled jobs, and the Treasury this week said it expects the labour market to show gradual signs of improvement as the Canterbury rebuild gathers momentum.

New Zealand's labour market has been struggling to convert hiring intentions into actual jobs as the economy slowly recovers, and the headline unemployment rate has been a bone of contention among economists who say it's out of synch with other data. Forecasts have been surprised at the level of unemployment in the three quarters before today's release, which was slightly below the consensus.

Full-time employment grew 0.4 per cent to 1.71 million in the quarter, while the number of part-time jobs plunged 6 per cent to 486,000. Total jobs were down an annual 1.4 per cent, while unemployment was up 6.8 per cent from a year earlier. Actual hours worked declined 0.1 per cent to 73. 14 million hours, and was down an annual 1 per cent.

The annual decline in jobs was led by a 19 per cent plunge in self-employment, which has been falling from a peak in December 2011.

Otago had the lowest unemployment rate across the regions at 4.3 per cent, with Southland at 4.6 per cent and Canterbury at 4.9 per cent. Northland had the highest rate at 9.5 per cent. Auckland's unemployment rate improved to 7.2 per cent, while Wellington's rose to 7.9 per cent.

Youth aged 15 to 24 not in employment, education or training (NEET), a target demographic for the government, rose to 14.2 per cent, the highest level since March 2011, though coming at the end of calendar year when programmes typically end.

The number of jobless people fell to 284,500 from 294,900 a quarter earlier, and was up from 261,300 at the end of 2011. The number of people discouraged from seeking working because they believe they lack the appropriate skills rose 2,400 to 10,100 in the three month period.

Underemployment, which counts those people in part-time work wanting more hours, fell to 111,000 from 113,300 in the quarter, and was up from 105,100 a year earlier.

New Zealand's unemployment rate is now the 14th lowest among developed nations, below Canada's 7.2 per cent and above Israel's 6.7 per cent.