The Labour Department is expecting New Zealand's unemployment rate to rise to 4.4 per cent by early 2008 as employment growth eases.
In its latest labour market outlook, the department said that despite the easing during the next year, employment growth was still expected to remain positive. It
projected 1 per cent growth for the March 2007 year.
The easing in employment growth was in line with a slowdown in the wider economy since mid-2005.
The department forecast the unemployment rate would rise from the June quarter's 3.6 per cent -- equal lowest since the Household Labour Force Survey began in 1985 -- to 4 per cent in the March 2007 quarter and 4.4 per cent a year later.
It picked the labour force participation rate, which rose to an all-time high of 68.8 per cent in the June quarter, to be at 68.3 per cent in the March 2008 quarter.
Industries that had made a significant contribution to economic growth in the past three years tended to be the most labour intensive, including construction and services such as health, education, wholesale and retail, the department said.
The dependence on labour in those industries partly explained why growth in employment had been high relative to economic growth. That effect was expected to reverse in the next two years.
Export sector employment, including forestry, fishing and manufacturing, had fallen in the past three years. The share of employment in those sectors fell to a record low of 21 per cent in the year to March, but had since stabilised and was expected to rise in the next couple of years.
Wage growth was expected to stay high in the year ahead, given low unemployment and the recent rise in consumer price inflation to a six-year high of 4 per cent in the year to June.
But some easing was expected given the fall in skill shortages and a one to two year lag between skill shortages and wage growth.
Statistics New Zealand will publish September quarter employment data next week, with the Labour Cost Index and Quarterly Employment Survey out on Monday, followed by the Household Labour Force Survey on Thursday.
- NZPA
