New Zealand's unemployed rate fell more than expected in the third quarter as construction, retail and hospitality firms hired workers. The kiwi dollar jumped a third of a US cent on the figures.

The unemployment rate slipped to 6.2 per cent in the three months ended September 30 just below the 6.3 per cent forecast in a Reuters survey of economists, and down from 6.4 per cent in the June quarter, according to Statistics New Zealand's Household Labour Force Survey.

One economist said this morning's figures " highlight the broadening nature of the economic recovery" with surprisingly good jobs growth outside of the Christchurch rebuild.

The labour market got a boost, with 1.2 per cent growth in employment, beating estimates of 0.6 per cent, led by gains in retail, accommodation and food services, and the construction sector. Those gains were primarily in Auckland and Christchurch, the country's two biggest cities, which are also facing construction booms. Full-time employment rose 1 per cent and part-time jobs grew 1.1 per cent.


New Zealand's participation rate rose to 68.6 per cent in the September quarter from 68.1 per cent in the previous quarter, against the backdrop of increasing net migration. The labour cost index, which measures wage inflation, rose 0.5 per cent across private and public sectors and including overtime.

Ordinary time private sector wage inflation increased 0.4 per cent in the quarter, and was up 1.6 per cent on an annual basis.

"We saw continued improvement in the labour market conditions over the quarter as employment rose and unemployment fell," Diane Ramsay, industry and labour statistics manager, said in a statement. "However, annual wage inflation remains constrained."

The New Zealand dollar jumped to 83.60 US cents from 83.28 cents immediately before the 10:45am report. The kiwi rose to 87.94 Australian cents from 87.60 cents before the report.

ASB Bank economist Jane Turner said that employment growth was much stronger than expected over the quarter.

"Most of the surprise was due to stronger employment growth outside of Canterbury, up 1.2 per cent according to ASB seasonally-adjusted estimates. Much of the strength appears to be from Auckland and to a lesser extent Wellington," said Turner.

As expected, seasonally-adjusted employment in Canterbury bounced back from last quarter's surprisingly weak result. However, the overall level of Canterbury employment remains subdued given increased construction activity and broadening demand in the region.

Turner said that much of the growth appeared to be in retail and food and beverage services. "This is consistent with the broader pick-up in consumer confidence and retail demand over the past year."


"Overall, the employment figures highlight the broadening nature of the economic recovery," said Turner. " Given we feel the survey may be understating the strength of employment demand in Canterbury, we feel that the robust Q3 outcome may still be understating the strength of the NZ labour market."

Gains in the labour market come as the outlook for the economy improves on the prospect of major construction work in Auckland and Christchurch, and upbeat outlooks among businesses.

The primary sector was a weak spot. Jobs in agriculture, forestry and fishing fell to 138,700 in the September quarter from 147,100 from June. The primary sector was hit by the worst drought in 70 years during the summer.

Total hours worked rose 1.6 per cent to 76.11 million hours in the quarter, and were up 3.8 per cent on an annual basis

The Quarterly Employment Survey, also released today showed ordinary time private sector wages rose 1.6 per cent to $25.91, and were up 2.6 per cent on an annual basis, outpacing the 1.4 per cent growth in public sector wages to $35.33. Average weekly paid hours for full-time equivalents ordinary time rose 1.4 per cent to $1,050.05.

New Zealand's unemployment rate ranked 13th lowest among developed nations, below Israel and above Denmark.