The number of people employed jumped a record 38,000 in the March quarter, reversing a 21,000 fall in the December 2012 quarter, while the number of unemployed fell 9000.
Those numbers are seasonally adjusted. But the normal pattern of a fall in employment and a rise in unemployment between the December and March quarters broke down this year.
Consequently Statistics New Zealand's seasonal adjustment amplified the quarterly changes, which were a still impressive 35,000 increase in the actual or unadjusted number of employed and a 5000 drop in the unemployed.
On an annual basis the rise in employment is more modest, however. Compared with the March quarter last year there were 9000 (0.4 per cent) more people employed. But there were 3000 fewer working in construction nationwide including 100 fewer in Canterbury, the survey found.
"That contradicts other data, such as building consents, that point to strong increases in construction activity over the past year," said ASB economist Daniel Smith. "While the household labour force survey has shown an improving labour market in Canterbury over the past year, there are question marks over how well the survey is capturing the direct impact of the rebuild effort."
It recorded an unemployment rate of 4.3 per cent in Canterbury but 6.9 per cent (on a comparable basis) in the rest of the country.
The labour force participation rate, which is the proportion of the working-age population either employed or actively seeking work, reversed half of the steep fall it recorded in the December 2012 quarter.
But at 67.8 per cent it is the lowest, apart from the preceding quarter, it has been for five years.
That makes the unemployment rate look better. If the participation rate had remained where it was a year ago, the latest unemployment rate would have been 7.2 per cent, Smith said.
More than half the March quarter's employment gains were among those aged under 30, and another fifth among those over 65. Full-time employment accounted for 81 per cent of the increase.
The NEET rate - the proportion of those aged between 15 and 24 who are not in employment, education or training - fell to 12.5 per cent, down from 14 per cent at the end of 2012 and the lowest rate for 18 months.
Westpac economist Felix Delbruck said the broad range of labour market indicators pointed to a modest improvement in early 2013, after moving more or less sideways over 2012.
The household labour force survey was no longer sending confusing signals at odds with other information about the state of the economy, he said.
"In the September quarter last year, the unemployment rate leapt unexpectedly to 7.3 per cent. The Reserve Bank, with most other economists, suspected that was probably a rogue signal. But nobody could be absolutely certain. There was always the possibility that the labour market really had weakened significantly."
The March data strongly discounted that risk, Delbruck said. "The central bank is now free to focus on the other factors affecting inflation - the Canterbury rebuild and rising house prices on the upside, Government austerity and the high exchange rate on the downside."
