Drop in jobless rate to 6pc is the biggest in at least 24 years
Economists used words like "amazing" and "stunning" to describe the March quarter jobs data released yesterday.
It is the steepest quarterly drop in both the number of unemployed (down 25,000 to 140,000) and in the unemployment rate (down from 7.1 to 6 per cent) in the 24 years for which comparable statistics have been compiled.
The decline more than reverses the unusually steep rise in unemployment recorded in the December quarter.
But it still leaves the unemployment rate well above its level a year ago (5.1 per cent) or two years ago (3.9 per cent.)
The markets reacted by pushing up wholesale interest rates - a June start to the Reserve Bank's expected series of official cash rate increases is now fully priced in - and the dollar.
BERL chief economist Ganesh Nana said the rapid exchange rate response was a concern.
"With the kiwi dollar now back about 80c against the aussie, the incipient recovery in certain areas of manufacturing we were beginning to see is again in jeopardy."
Westpac economist Dominick Stephens said it was now beyond doubt that the recovery was well into a normal post-recession phase, with vigorous growth and falling unemployment.
December was clearly the peak in unemployment and when the statisticians had finished their revisions it might well turn out to have been below 7 per cent after all, he said.
ANZ economist Mark Smith said forward-looking indicators, like firms' hiring intentions in the business sentiment surveys and the Department of Labour's tally of on-line job advertisements, suggested further employment gains ahead.
Some of the factors which might have taken some of the gloss off such a dramatic improvement do not apply. It is not a case where the unemployment numbers are flattered by a lot of people getting discouraged and withdrawing from the labour force. The participation rate, which is the proportion of people over 15 who are either working or actively seeking work, was unchanged from December at a relatively high 68.1 per cent.
Nor is it the result of a rise in part-time work. The number employed rose 22,000 but the number employed full-time rose 26,000.
And hours worked rose even more steeply (1.7 per cent) than the headcount measure of employment (1 per cent).
Nor is it a matter of people leaving in large numbers for Australia. Departures are rising but in the March quarter they were 17.5 per cent lower than in the same period last year.
Where the numbers might be seen as a statistical artefact relates to seasonal adjustment. The normal pattern is for a rise in employment in the December quarter, to do with the holidays and seasonal work in agriculture, which is then reversed in the March quarter. This a well established pattern which the statisticians adjust for.
But this year it broke down. There was only a small drop in employment in the March quarter and the number unemployed did not rise, it fell.
"But you can cut through all of that by looking at the raw numbers," Stephens said.
The number of unemployed fell 5400 in raw or unadjusted terms.
"The average for the last 25 years has been an increase of 11,000." he said.
"This is a stunning result and there is no getting away from this."
The market had not fully internalised the fact that New Zealand was going through a commodity price boom that was now bigger than the dairy boom of the last decade, Stephens said.
* Jobless rate down 1.1 points to 6 per cent.
* Number of people unemployed down 25,000 to 140,000.
* Number employed up 22,000 to 2.18 million.
Source: Household Labour Force Survey, Statistics New Zealand