KEY POINTS:
The number of New Zealanders in work rose to a record high in the June quarter, while the unemployment rate eased to 3.6 per cent, equal to the lowest rate recorded in the Household Labour Force Survey.
The labour force participation rate increased by 0.2 of a percentage point over the quarter to 68.6 per cent, also the highest ever recorded by the survey since it started in 1986, Statistics New Zealand (SNZ) said, releasing the data today.
Employment increased by 14,000, or 0.7 per cent, to reach 2.158 million. Part-time employment grew by 8000 (1.8 per cent) during the quarter, while full-time employment was up 7000 (0.4 per cent).
The good labour market news could be bad news for borrowers with the Reserve Bank likely to respond by increasing interest rates yet again. The New Zealand dollar jumped back over US77c on the news from just over US76c at yesterday's market close.
The 0.1 percentage point drop in the unemployment rate, from a revised 3.7 per cent in the March quarter, came as the number of people unemployed dropped by 2000 (2.9 per cent) to 81,000, wholly driven by a drop in male unemployment, with female unemployment remaining constant, SNZ said.
The working age population grew by 7100 in the June quarter to 3.255 million, up 0.2 per cent from the previous quarter, the lowest gain recorded since the June 2001 quarter. The quarter was also the first since September 2005 where a loss in mean permanent and long-term migration was recorded, with a drop of 700.
The rise in the labour participation rate to the record 68.8 per cent resulted from the labour force increasing at a greater rate than the working-age population, with the labour force growing over the quarter by 12,000 (0.5 per cent) to 2.239m, SNZ said .
The number of people not in the labour force dropped by 4000 (0.4 per cent) to 1.015m.
Today's figures were better than had been expected with the median forecast from economists in a Reuters poll having been for an unemployment rate of 3.8 per cent. The median prediction for quarterly employment growth was 0.3 per cent and for the participation rate was 68.5 per cent.
Annually, employment was up 33,000, or 1.5 per cent, while unemployment was up 1000, also 1.5 per cent.
In the year to June, the working-age population increased significantly in the Auckland, Waikato and Bay of Plenty regions and decreased significantly in the Wellington region, SNZ said.
BNZ currency strategist Danica Hampton said the figures showed that not only was the labour market tight, it was getting tighter.
"The message is that it's premature to conclude that the Reserve Bank had finished its tightening cycle."
She said that following the bank's statement last month people had been led to believe the bank was done and dusted with rate rises in the current business cycle.
Interest rate expectations pushed up the kiwi.
Ms Hampton did not believe the kiwi would revisit levels above US80c.
"We think the New Zealand economy is slowing, growth is moderating. Provided that pans out, we think that the currency will fall."
UBS economist Robin Clements said the data "could be the last hurrah associated with the resurgence in the economy late last year, and the beginning of this year".
"But given the experience of recent years you'd be brave to say that, but this could contribute to the economy continuing to be resilient. "The Reserve Bank thinks it's done, but it could be a bit premature to be completely ruling that out."
Goldman Sachs economist Shamubeel Eaqub noted most of the employment growth was in part-time work.
"I think we've got to the situation where if the Reserve Bank's interest rate increases in the first half are going to weaken the economy, then this labour market is going to turn.
"The resilience of the labour market is certainly something that will keep the Reserve Bank wary, but I don't think there is enough in this data to suggest there is a risk of further hikes."
- NZPA
