Unemployment rate lifts to 6.7pc

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New Zealand's unemployment rate unexpectedly rose to 6.7pc in the first quarter after the labour force swelled to a three-year high as more people started looking for work in what's been a tight jobs market. The kiwi dollar fell after the data was released.

The unemployment rate rose 0.3 percentage points to 6.7 per cent in the three months ended March 31, from a revised 6.4 per cent in the prior quarter, according to Statistics New Zealand's household labour force survey. That's higher than the 6.3 per cent forecast in a Reuters survey of economists.

While the number of unemployed people climbed 6.1 per cent to 160,000, the labour force participation rate rose 0.6 percentage points to 68.8 per cent, its second-highest reading on record and beating expectations of 68.3 per cent. The number of people employed grew 0.4 per cent to 2.23 million in the quarter, ahead of the 0.3 per cent growth forecast.

"We saw increases in both the number of people in work and the number out there looking for work in the March 2012 quarter," industry and labour statistics manager Diane Ramsay said in a statement. "This meant participation in the labour force rose to the highest level since its peak just over three years ago."

The New Zealand dollar fell to 80.68 US cents after the report from 80.84 cents immediately before.

Most of the growth in unemployment was among women, who had a jobless rate at 7.1 per cent, while jobs growth was primarily among men, with the employment rate rise half a percentage point to 70.2 per cent.

The mixed data comes after Euro-zone jobs figures showed that region's unemployment rate hit a 15-year high 10.9 per cent in the March quarter, and ahead of US non-farm payrolls, where economists are picking the world's biggest economy added 175,000 jobs last month.

Local government figures earlier this week showed tepid wage inflation in the first quarter and flat jobs growth in the Quarterly Employment Survey.

New Zealand's jobs growth has been in part-time positions, which grew 2.5 per cent in the quarter to a record-high 531,000. That follows on from the December quarter, which showed a 3.2 per cent pick-up in part-time work, which stoked the jobs market at the tail-end of last year.

Full-time employment shrank 0.2 per cent in the period to 1.7 million, the lowest level since September 2010.

The level of underemployment, which is part-time workers who would like to work more hours, rose to 2,500 to 107,600 people in the quarter.

The number of seasonally adjusted hours worked in the quarter rose 0.1 per cent to 73.88 million in the quarter.

The arts, recreation and other services industry showed the biggest gain in people employed, rising to 139,900 from 126,200 in the December quarter, followed by 3,200 gains in both transport, postal and warehousing, and rental, hiring and real estate services industries.

The number of people employed in construction fell to 174,600 from 178,800, while education and training fell to 192,900 from 199,300.

Youth aged 15 to 24 not in employment, education or training (NEET) rose to 13.6 per cent in the quarter from 13.1 per cent in the December quarter.

Auckland unemployment climbed to 7.9 per cent from 6.7 per cent in the prior quarter, with an increase in the participation rate to 69.1 per cent from 68.7 per cent. The Manawatu-Wanganui region posted the highest unemployment rate at 8.9 per cent, while Southland joblessness was the lowest at 4.4 per cent.

The rate of unemployed Pacific people rose to a record-high 16 per cent from 13.8 per cent in December, while Maori unemployment rose to 13.9 per cent from 13.4 per cent.

New Zealand's unemployment rate was the 12th lowest with Iceland, behind Germany's 5.7 per cent, and ahead of Chile's and the Czech Republic's 6.8 per cent.