New Zealand’s unemployment rate rose to 4.3% from 4% in the first three months of 2024, according to Statistics New Zealand.
This means the labour market is weakening at a faster rate than expected by the Reserve Bank (RBNZ) and some bank economists.
The RBNZ had forecast the unemployment rate to reach 4.2% in the March quarter as had Westpac, ANZ and Kiwibank economists.
ASB and BNZ economists had forecast correctly that it would climb a touch higher to 4.3%.
The RBNZ had previously said in its February Monetary Statement that labour market pressures were easing, “but by less than expected”.
Unemployment has ticked up since its record lows of 3.2% in the December 2021 and March 2022 quarters due to restricted borders limiting increases to labour supply while labour demand was still running high.
The underutilisation rate for the March 2024 quarter – which includes people who want more work hours despite having a job – went up from 10.4% to 11.2% in the quarter, and from 9.1% in the March year.
31,000 more people unemployed
Stats NZ said on Wednesday over the year unemployment rose by 31,000 to 134,000, while total underutilisation rose 75,000 to 355,000.
In the same period, youth unemployment or those between the ages of 15 and 24, reached 21,000, while youth underutilisation was up by 44,100.
The seasonally adjusted number of unemployed people rose 10,000 to 134,000 over the March quarter.
The total employment rate was 68.4% in March. That’s down from 69% in the December quarter and down from 69.7% in March 2023.
The employment rate last peaked at 69.8% in June 2023.
The working age population increased by 129,000 to 4.3 million while the number of people employed rose 36,000 to 2.9 million over the March year.
While the annual rate of youth employment fell by 24,900 to 381,800, employment numbers for people between the ages of 30 and 44 rose by a non-seasonally adjusted 50,800.
“While the employment rate has declined from recent highs over the past year-and-half, it still remains high within the full Household Labour Force Survey (HLFS),” said Stats NZ labour market manager Deb Brunning.
Wage growth slowing
Although wages and earnings have continued to grow despite the weakening labour market, Stats NZ said annual wage growth is starting to slow down.
“Wage cost inflation continued to grow over the year, but annual growth was slower than it has been in recent quarters,” Brunning said.
The labour cost index, which measures how much a typical job costs for employers, increased 4.1% in the year to March, compared to 4.3% in the December quarter.
Average hourly earnings rose 5.2% to reach $40.96 – an annual increase of $2.03, and average weekly earnings increased 5.8% to $1,593.
Average hourly wages rose higher for women, up 6.9% to $38.87 compared to the average hourly earnings for men which rose 3.8% to $42.79.
“While women have received greater increases to average hourly pay over the last year, as measured by the Quarterly Employment Survey, men’s average earnings remained nearly $4 per hour higher than women’s in the March 2024 quarter,” Stats NZ business employment insights manager Sue Chapman said.
Like the December quarter, public sector wages rose faster than in the private sector.
Annual private sector wages were up 3.8% in March, while in the public sector they were up 5.6%.
That wage growth for private and public sectors is still much lower than in the December quarter though where private sector wages were up 6.6% and up 7.4% in the public sector.
Stats NZ released their household living-costs price indexes (HLPIs) for the March quarter on Monday, revealing that the average cost of living for New Zealand households increased by 6.2% in the year to March 2024, driven notably by a 28% surge in interest payments on debt.
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