New Zealand's unemployment rate fell below 5 per cent for the first time since December 2008 as employers took on more staff than expected, although that didn't spur wages to rise at a faster pace. The kiwi dollar rose on the figures.
The unemployment rate fell to 4.9 per cent in the three months ended September 30 from a revised 5 per cent rate in June, Statistics New Zealand said. Employment grew 1.4 per cent in the quarter, outpacing a 0.5 per cent gain economists were picking, with rental, hiring and real estate services adding 5,000 jobs in the period. That was also faster than a 0.7 per cent increase in the size of the working-age population, which helped drive up the participation rate to a record 70.1 per cent, though a new methodology influenced that series.
"This strong growth in employment, coupled with fewer unemployed people, pushed the unemployment rate below 5 per cent for the first time in nearly eight years," labour and income statistics manager Mark Gordon said in a statement.
The New Zealand dollar rose to 72.05 US cents from 71.81 cents immediately before the report was released. The trade-weighted index climbed to 77.49 from 77.16.
New Zealand's swelling population, fuelled by record migration, has kept wage increases limited in recent years, stifling domestically generated inflation at a time when a strong kiwi dollar makes imported products cheaper. That low level of consumer price inflation has contrasted with rapid gains in asset prices such as housing and made life difficult for the Reserve Bank which has refrained from slashing interest rates for fear of stoking an ebullient property market.
Today's data show wage inflation remained muted, with the ordinary time private sector labour cost index increasing 0.4 per cent in the quarter, unchanged from the previous quarter, and in line with economists' expectations. Rental, hiring and real estate services, which added 5,000 jobs largely in Auckland, registered no increase in salary and ordinary time wage rates in the quarter, the only industry group that didn't eke out a gain in the period.
Public sector wages rose 0.7 per cent in the quarter, due largely to new collective agreements for nurses, primary teachers and police.
About 19.5 per cent of the country's workforce was on collective agreements in the September quarter, with 18.7 per cent members of a union. Southland reported the highest rate of union membership at 23.6 per cent, while Auckland had the lowest at 16 per cent.
Auckland accounted for more than half of the new jobs added in the quarter, though its unemployment rate ticked up to 5.3 per cent from 4.7 per cent as more people entered the labour force. The Tasman, Nelson, Marlborough, West Coast region had the lowest unemployment rate at 2.8 per cent, while Northland's was still the highest at 7.6 per cent.
The figures showed total hours worked rose 1.2 per cent in the quarter for an annual increase of 6.7 per cent.
The recently added underutilisation rate, which seeks to measure the potential labour supply, was at 12.2 per cent, down from 12.7 per cent in June. The part-time employment rate was at 21.8 per cent, up from 21.5 per cent in the previous quarter.
The quarterly employment survey, also released today, showed ordinary time private sector hours rose 0.3 per cent in the quarter to $27.81 for a 1.6 per cent annual gain. Public sector wages rose 3 per cent to $37.45, and were up 1.4 per cent.