Economists are dubious about the size of the improvement in the labour market indicated by new figures, but generally view the data as showing the jobs situation is moving in the right direction.

The Household Labour Force Survey for the September quarter, published today by Statistics New Zealand showed a fall in the unemployment rate to 6.4 per cent from 6.9 per cent in the previous three months.

Seasonally adjusted employment rose 23,000 or 1 per cent during the quarter to 2.19 million, while unemployment fell 6.1 per cent or 10,000 to 150,000.

The labour force participation rate rose 0.2 per centage points in the quarter, and 0.3 per centage points over the year, to 68.3 per cent.

Compared to a year ago, the unemployment rate is down 0.1 per centage points, the number unemployed is up 0.3 percent and the number employed is up 1.8 per cent.

Market expectations had been for an unemployment rate of 6.7 per cent, with employment rising 0.5 per cent in the latest quarter.

Reflecting a common concern, Goldman Sachs economist Philip Borkin said he had some reservations about whether the household survey, which had shown considerable volatility in the previous two quarters, was painting a true representation of the state of the labour market.

The male unemployment rate looked to be the culprit in causing the significant volatility in the headline figures in today's figures and for the two quarters before that, Borkin said.

Figures for men and women diverged in the latest survey. Female unemployment rose to 7.2 per cent from 6.8 per cent in the previous quarter, while the male unemployment rate fell to 5.7 per cent from 6.9 per cent.

Males in employment rose by 21,000, while females were up by 1000 in the latest quarter, but the number of unemployed males fell by 15,000 and the number of unemployed females rose by 5000.

"In our minds, we find it difficult to reconcile why this type of divergence would have occurred," Borkin said.

But putting aside the issues of data quality, the survey did provide more evidence that the labour market had turned.

At the same time, Goldman Sachs' figures estimated that the seasonally adjusted unemployment rate in Auckland was 8.1 per cent, while the rate for the rest of the country was 5.7 per cent.

So, much of an improvement in labour market statistics would have to come from Auckland.

"Given Auckland's exposure to consumer-related sectors and the current backdrop of a weak housing market and cautious consumer, this reinforces in our minds that the process will indeed be gradual."

ANZ economists Sharon Zollner and Mark Smith saw the data indicating the labour market was "turning the corner, though significant slack remains".

They noted a 0.8 per cent rise in hours worked in the three months to September was the third consecutive quarterly increase for that measure.

Along with some improvement shown in recent employment intentions surveys, that suggested further employment growth was in the pipeline, the ANZ economists said.

"But with average hours still very low by historical standards, the decline in the unemployment rate may be more gradual than the pick-up in employment."

- NZPA