By Alex Tarrant and Bernard Hickey
New Zealand’s unemployment rate rose unexpectedly to 6.6% in the September quarter from 6.5% in the June quarter and jobs growth was less than half that forecast by economists.
Economists cited a slow rebuild in Christchurch that hit employment there and a drop in part time job employment as growth linked to the Rugby World Cup was weaker than expected.
The New Zealand dollar fell almost half a cent to 78 USc after the data and on concerns about the European debt crisis. It has fallen from 82 US c on Monday. Wholesale swap interest rates fell around 2 basis points as some in the market extended their expectations slightly about when the Reserve Bank would increase the Official Cash Rate (OCR).
Fixed mortgage rates have dropped around 40-50 basis points in the last week as banks passed on recent drops in wholesale swap rates. Most borrowers however are staying on floating or moving to floating rates, which are cheaper than fixed rates and tend to move with the OCR, which is not expected to be lifted until midway through next year.
Unemployment rose despite 0.2% growth in employment because more people joined the labour force over the three months, particularly as those not previously seeking work began actively looking for it.
The number of people employed in the September quarter rose by 5,000, or 0.2%, to 2,218,000 from June, Stats NZ said. Excluding the Canterbury region, nationwide employment would have risen 1% over the quarter, Stats NZ said. The number of unemployed rose by 3,000 to 157,000 over the quarter.
Economists had been expecting the unemployment rate to drop to 6.4% over the quarter, and for employment to rise 0.6%.
The labour force participation rate – those in the working age population employed or looking for work (unemployed) – rose 0.1 percentage points to 68.4% in the September quarter from June. Those not in the labour force fell 2,000 to 1,095,000.
The September 2011 quarter unemployment rate of 6.6% compared with a rate of 6.4% in September 2010, and 6.5% in September 2009.
“In the September 2011 quarter, the labour force grew, with increases in both the number of people employed and the number of people unemployed,” Stats NZ industry and labour statistics manager Diane Ramsay said.
“The growth in employment reflects a rise in full-time employment, while part-time employment dropped slightly over the quarter,” Ramsay said.
There were different labour market movements for men and women over the quarter, Stats NZ said.
The number of men in employment rose, and the number of men in unemployment fell. However, the number of women in employment fell, while the number of women in unemployment rose, Stats NZ said.
Canterbury
In Canterbury, unadjusted figures show the unemployment rate in the region was 5.5% in the September 2011 quarter, compared to 4.8% in September 2010.
"The Canterbury labour market continues to move differently from the national labour market. While nationally employment grew by 1.1% over the September 2011 year, the number of people employed in the Canterbury region has fallen by 8.0%," Stats NZ said.
Economist reaction:
ASB Economist Jane Turner said the job losses in Canterbury were largely concentrated in the retail and hospitality sectors because of the destruction of the central business district and the closure of many hotels.
Beyond the declines in Christchurch, the rest of the country continued to perform well, suggesting the underlying economic recovery remains in place. Growth in full-time employment led the increase, while hours worked grew a robust 1% over the quarter, both indications that underlying demand for labour continues to improve.
For the RBNZ, there are some encouraging signs within the Q3 survey despite the disappointing headline. We continue to expect the RBNZ to lift the OCR in March. However, for the time being, the European sovereign debt crisis remains the main focus for the RBNZ. The ongoing political drama in Europe sees the risks increasingly skewed to a later and more gradual tightening cycle.
Westpac Economist Dominick Stephens said the data supported his view the New Zealand economy had just gone through a soft patch.
This supports our view that the New Zealand economy has endured a soft patch through mid-2011, as cooling general domestic activity has not yet been replaced by Christchurch reconstruction. This will further reduce short-term pressure on inflation, meaning the Reserve Bank can delay OCR hikes beyond the March start date it previously indicated.
We had been expecting evidence of temporary hiring for the Rugby World Cup. The drop in part-time employment actually denies support to this hypothesis. However, actual hours worked jumped 1% while usual hours worked fell 0.2%, perhaps suggesting that existing staff worked longer hours during the cup boost (although this could also be statistical noise).
HSBC Economist Paul Bloxham said employment tended to lag economic activity and there was still more upward momentum in the pipeline.
Besides, 2H also gets a kick from the Rugby and the rebuild of Canterbury is yet to come. Nonetheless, last week’s low CPI and today’s softer employment numbers do mean there may be less rush for the RBNZ to normalise policy, particularly given heightened global risks.
Employment was weaker than expected, although hours worked have continued to rise. We still see that a recovery is in progress. Our central view has been that RBNZ would hike before year-end, but these data and heightened global risks suggest the risk is that they may choose to sit still for longer.
The chart below shows unadjusted figures:
Unemployment
Select chart tabs
(Updates with Canterbury figures, Westpac, HSBC and ASB economists reactions, market reaction)
44 Comments
It must vary widely from one sector to another. My husband was talking to someone yesterday who was telling him how there was apparently a big shortage in our line of work at present (software dev) in Chch/Canterbury.
That's certainly what we're seeing as contractors. Increasing workload, new customers contacting us. The other couple of IT consultants that we know are also flat out and have been for a while. That said, we've all noticed that more of our invoices are getting paid late. Maybe I should remind customers that the "due date" is not just an ornament on the page!
Programmers, not just Chch......I glance at the jobs everyday in wgtn from the seek emails and trademe and while I look for Linux and VMware most of the jobs in those categories are for things like .net, java and C++....like what? why the overflow......I know we want java ppl but we cant or wont pay for them.....and its now we get default products and dont customise them.....we look at changing the business processes first.....
"due date" yes and that was always the problem I had.....lots of work but picking the ones who would pay and on time was the biggest issue....
regards
Yep. Gotta say we don't actually work solely for Chch companies despite being located near Chch and our work is not limited to just programming (it goes from concept/design/project management through to QA & support, and also includes the programming side).
One of our large customers is an Auckland-based one and we've got a major project due to kick off that has been commissioned by the Institute of Astrophysics for a foreign govt, and another significant project for an Australian company. That said we also do some stuff for a local lab which is the only one of its kind in NZ + Aus plus some design & devt for a few other local companies. It's very varied!
The number of people employed in the September quarter rose by 5,000, or 0.2%, to 2,218,000 from June, Stats NZ said
Actually the number of people employed dropped by 2k before they ran the numbers through their magical seasonal adjustment machine. Just filled a position for a recent uni graduate (science), unbelievable the number of motivated A-grade candidates with excellent attitude we could choose from.
not surprised
am expecting it to get up to 7% next year, as fewer kiwis move to Aus (Aus is slowing) and the traditional Euro OE opportunities are not what they used to be
Govt spending will need to be moderated in a drive to get back to surplus, so there will be a lack of stimulus in that area
People are working longer now, by choice or necessity, and with minimal job growth and tens of thousands of graduates each year something has to give
I think we will be lucky if unemployment stays as low as 7% next year. Remember the government has been borrowing $360 per person per month - 10% of GDP - for over a year:
http://www.interest.co.nz/opinion/56517/key-goads-goff-show-me-money-de…
That level of borrowing will reduce after the election, and then?
Yes, the Govn borrowing / spending is what has kept us going......the interesting thing is Wgtn is apparantly pro-labour (arnt all NZ "cities?").....ppl voting to keep their jobs it seems.....
Why should the level of borrowing stop? (have I missed something?) sure something has to give its spend less or tax more..........it has to balance at some point.
"and then" well if we go for austerity then we go into a downward tail spin....un-employemnt past 10% etc etc...
regards
Why should the level of borrowing stop? (have I missed something?) sure something has to give its spend less or tax more..........it has to balance at some point.
The level of borrowing should stop because because we are using debt to consume more than we earn, and we will eventually get to the point where we can no longer service the interest.
My understanding from Treasury's pre-election update (Key's so called 'little ray of sunshine') is that government is going to tax more, and reduce increases in spending. But GDP is going to have to increase by 28% over the five years. Exports increase by $16 billion per year, but imports by $23 billion. The current account deficit blows out to $17.6 billion pa.
So you are right, the borrowing is to continue but it is to be shifted from the government to the private sector. And, just in case you think TSY's forecasts are credible, they depend on our currency falling by 13.5% (TWI) over the five years, and 20% against the USD. Unemployment falls to under 5% by 2014. Dairy export prices rise by 4.4% in the June 2012 year (over 2011).
TSY's PREFU may be a 'little ray of sunshine' to Key in that it supports his contention of a government return to surplus in 2014 (despite the government's net worth falling from $78 billion to $64 over the three years), but it is in reality a nightmare where even with the rosiest spin in the world the country is getting poorer to the tune of $12.5 billion a year by 2014, and $17.6 billion by 2016.
http://www.interest.co.nz/news/56460/businessdesk-key-touts-nationals-p…
Yeah it hard to say who is more deluded in their messages -- Treasury (although the prefu does seem to have a lot more qualifications and provisos in the document than were in the budget documentation) or the bank economists surprised that unemployment rose.
Another interesting bit in the prefu is the net core crown debt (table 2.6). It shows net (core crown) debt reducing from about 22% of GDP in 2000 to 8% in 2008, then increasing to about 22% again in 2011, and predicted to increase to just under 30% of GDP and staying like that from 2013.
In residual cash terms it shows small negative in 2000, then positive from 2001 to 2008 inclusive, then negative to 2016 when the table finishes.
More confirmation that the books will be balanced by 2014-2015 year I suppose?
More confirmation that the books will be balanced by 2014-2015 year I suppose?
You would only believe that if you were very credulous. I am not, and from where I am looking there is already enough variation between prefu's forecast and real data to indicate prefu is going to come in very wide of the mark.
If you want another interesting set of numbers look at the time series for fiscal indicators and total crown net worth. It falls from $105.5 billion in 2008 to $65.9 billion in 2013 - from $24,000 per person to $15,000. That before taking another $6 billion off to provide a realistic valuation for rail.
Key in two terms is going to oversee the disappearance of at least 40% of what was the crown's net worth when he became PM.
sure, it could be higher
the main point is the direction it is going in
there is a real risk that as it rise property prices will dip down again. I think Tony Alexander said a cople of years ago if unemployment goes above 6.5% it will place downward pressure on house prices
I think that it is a very decent print... Considering the state of the Global economy NZ is doing well, soon those workers are going to start coming home for the ChCh rebuilding and wages are going to swell, the reaction in the currency is just a happy trigger blip... everybody is very jumpy these days but the NZ apple cart is going. I know many would be more than happy to show a 6.6% unemployment, and the next reading is going to be better.
??? if your not looking for work does that mean your employed? Or ist it fuzzy numbers, blimmin beauracrats making it complicated to know what is going on.
New Zealand’s unemployment rate rose from 6.5% to 6.6% in the September quarter from June, even though the number of people in jobs rose, figures released by Statistics New Zealand showed today.
The reason for that was more people joining the labour force over the three months, as people who were not previously seeking work began actively looking for it.
Updated with a video from ANZ economist Khoon Goh up top.
He makes some interesting comments about hours worked - employers still upping hours worked by existing employees before they hire new people it seems, and there's still some slack there.
Sorry for the quality, had to use the Flip, and then the lighting wasn't too great so had a play around.
Cheers
Alex
And how many of those who are employed are working productively as this is one of our major problems? Further, how many of them are working at something that contributes to the counties export income or import replacement?
If the Situations Vacant adds are representative of what passes for employment in NZ it is clear that most employement contributes very little. Most of us are just scratching each others backs, trying to sell each other back scratchers, importing back scratchers, teaching back scratching, researching back scratching or counseling those who are back scratcher deficient. The contributing, real jobs that are advertized are mostly in Australia. No wonder we loose so many good people. (The Australians have more than their fair share of back scratching too however).
Given our volatile exchange and the options for tax free speculation and financial manipulation any body setting out to export would have to be mad.
We certainly do not need any more imigrants to prop up the property market. We desperately need to reset our fiscal settings and begin the long hard task of redirecting our resources, including labour, to building capacity for import replacment and exporting.
Most of us are just scratching each others backs, trying to sell each other back scratchers, importing back scratchers, teaching back scratching, researching back scratching or counseling those who are back scratcher deficient.
Good material for a Dr Seuss book there:)
I'd happily hire a couple of people if I could do it on my own terms, but as a small business owner its just to damn hard and costly so I can't be bothered. So instead I outsource parts of my operation rather than hire anyone. Suits me fine.
The funny thing is that when I hear politicians talking about "job creation" I have a good laugh. Governments don't create jobs. People like me create jobs.
Totally agree with your 2nd paragraph. And I don't think you're the only one thinking/doing what you say in the 1st - the few small companies that we do development for would rather pay a higher hourly rate to use us (contractors) than hire employees who by the sounds of it, are too much of a risk and a cost for many smaller businesses.
The tourism sector in Christchurch is on a downer, but as we have a casual workforce lack of work doesn't show up in job figures. The Chinese market is growing (generally) but with Chinese price is first, second and third. Also a high proportion of Chinese tourists are driven incognito in vans without marking.
Where would the developers be without all the low paid minnions in tourism?
Or...the Eurppean cars coming in from the UK ( that's they can't sell?) rather than from Japan? I guess the exchange rate is working in the UK's favour..this ones on TradeMe @ about $100k less than a similar "NZ new" - makes me laugh as they all come from Germany.
http://www.trademe.co.nz/motors/used-cars/mercedesbenz/sls63/auction-420763638.htm
I think there was a news piece recently that there are too many ppl from other countries buying in Japan and NZ cannot compete. So they have moved to buy in the UK. The UK seems the latest cheap place....insurance is prohibitive over there from my experience so the high performance older cars become worthless pretty quickly...and the exchange rate means you get more pounds / eu for NZD at the moment....shipping from the UK is also very cheap....
regards
as long as Europe and North America struggle, our tourism sector will struggle.
From what I have witnessed a lot of the Chinese tourism market seems to be captured by Chinese tourism companies, souvenir shops etc. Would be interesting to know what proportion of their spending goes into NZ
I think myself tourism will go bye bye....as you say economies are in bad shape....you also dont get many NZD for EUs any more so its not cheap here any more....jet fuel will be so expensive in the medium term ie 5 years plus that i think cattle class will disappear for ever.....hence tourism is dead.
regards
steven almost 15% of Americans are on food stamps... so it won't be the yanks coming here on holiday...
http://hotair.com/archives/2011/11/02/food-stamp-use-reaches-record-45-8-million/
Europe is about to go tits up... so it won't be them either!
However Tourism (or lack there of) is probably the least of our problems!
The hard-working Chinese people are sick and tired of seeing their banks loaning the fat capitalist pigs all their hard earned cash so we can continue living our play-boy lifestyle and so they will soon say nay in a forceful way!
Fortunately though, houses will keep going up here... and being NZ, property will sustain us through the worst of it! Phew!!
Here is your morning lesson JK....
"For those who don't adjust in time, or don't adjust enough, there is bad news ahead"
"The consumer who is future-oriented chooses to consume less than he produces."
http://www.marketoracle.co.uk/Article31342.html
The economy that is future-oriented chooses to consume less that it produces. Ask yourself whether NZ fits into that pattern. !
Of course when western countries are beginning to manufacture/ producing or importing in Asian countries, people are losing their jobs in the thousand’s – result - tax revenue shrinks, caused by unemployment and massive GST losses. As a consequence the already bloated public services fail, which leads into a vicious domino affect, with more unemployment – driving fast towards bankrupted societies. New Zealand is no difference.
The economic and financial programs of Labour/ National/ ACT is just producing that scenario and will end up in disaster.
"We will not get to see the precise wording of Prime Minister George Papandreou's referendum because enough cowards in the Greek parliament in conjunction with blackmail by Merkel and Sarkozy have put an end to Papandreou's regime."
Low interest rates make people sell property.Over the last 20 years the house has become the ATM...a commonly used phrase...but it works both ways. When interest rates rise, people 'save' by putting their current income, and future income brought forwards through debt, into the capital gains apparent in property. Rates rise as demand for debt pushes them higher. When rates fall, a symtom of actual or a contrived reduction in debt creation, people use their cash savings first ( as the interest rate, income, on deposits falls); then they have to use the 'savings' tied up in their property - sell it - to live at the standard they have become acustomed to - especially those who have 'lived' off their interest income or used it as a supliment. That's the scenario we are witnessing overseas, and that will apply here...because all we, of all nations, have as a savings pool almost entirely existing in... property.
Many countries have thought the same re houses, goNZ. And 4% looks good to an Irishman that is facing a 60% capital loss on his home. Property as shelter, is a discressionary item, unlike food that is a necessity. People can always move to a chepaer house or cheaper rent, even at the expense of having to travel further to work etc. But they have to have food. That's what will make them sell the house....food. The longer people leave it to sell; the less they will have to buy that food...which gets more expensive...everyday..
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