Weak jobs data suggests rising unemployment rate

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A lack of job growth in the December quarter is pointing to a worsening unemployment rate.

The quarterly employment survey, published today by Statistics New Zealand (SNZ), measured a rise of just 0.2 per cent in the number of full time equivalent employees in the December year, while the December quarter was unchanged from the previous three months.

In the December quarter, average total weekly paid hours for full time equivalent employees rose 0.9 per cent, seasonally adjusted.

That was the third consecutive quarterly increase and the largest rise since the December 2004 quarter, SNZ said.

Total paid hours were down 0.2 per cent, seasonally adjusted, in the December quarter from the previous three months, while for the December year actual average total weekly paid hours rose 1.9 per cent.

Filled jobs fell 0.4 percent in the December year, as the number of full-time employees remained unchanged and part time employment rose 0.9 per cent.

ASB chief economist Nick Tuffley and economist Jane Turner said measures of labour demand were weak in the December quarter.

ASB's own estimate of full time equivalent employees, seasonally adjusted, fell 1 percent, which pointed to downside risk to forecasts for the household labour force survey data on Thursday.

They said they now expected the unemployment rate to lift to 6.8 per cent from 6.4 per cent in the third quarter.

The continued volatility in the unemployment rate in the past year would make it difficult to interpret the underlying trend in the labour market.

Despite that, the bulk of labour market data pointed to a solid improvement in labour demand during the past year, the ASB economists said.

Wage growth had picked up in the second half of 2010 from low levels, but remained subdued.

The labour cost index (LCI), also published today, showed an acceleration in wage growth over the past year, particularly in the private sector with unadjusted labour costs up 4 per cent on year ago levels.
"The series is not adjusted for changes in job quality, and the faster pace of increase suggests demand remains stronger for higher skilled workers," the ASB economists said.

"This is also consistent with business surveys which reveal that firms are already finding shortages of skilled labour, while unskilled labour remains relatively easy to recruit."

The LCI also measured the rise in salary and wage rates, including overtime, at 1.7 percent in the year to the December quarter, SNZ said.

In the private sector, salary and wage rates rose 1.9 percent in the year to December, while in the public sector rates rose 1.4 percent.

In the LCI, salary and wage rates, including overtime, rose 0.5 percent in the December quarter, with the private sector rise 0.6 percent.

- NZPA