New Zealand’s unemployment rate fell in the December 2011 quarter by more than economists had expected, although the rate of jobs growth over the three months was weaker than they had forecast, as a fall in full-time employment was made up for by a rise in part-time jobs.
The unemployment rate fell to 6.3% from 6.6% in the September quarter, Statistics New Zealand announced today. That was against the median economist expectation in Reuters and Bloomberg polls for a 6.5% unemployment rate in the December quarter.
There were 150,000 people unemployed at the end of the December quarter, down from 157,000 in September.
The number of people employed rose by 3,000, or 0.1% over the quarter to 2.221 million, versus expectations for 0.4% jobs growth.
Despite this slight growth in employment, the employment rate – the percentage of people with jobs against the working age population, stayed steady at 63.9%. This was because the increase in the number of people employed kept pace with the growing working-age population, Stats NZ said.
Seasonally adjusted part-time employment rose 3.0%, or by about 15,000, over the quarter, Stats NZ said. Unadjusted figures showed the largest annual increases in part-time employment was in the education and training industry.
Full-time employment fell 0.8% or about 13,000 to 1,703,000 jobs over the quarter. Seasonally adjusted figures show full-time employment steadily rose every quarter from 1,660,000 in the December 2009 quarter to 1,716,000 in the September 2011 quarter before the fall in the December 2011 quarter.
The fall between September and December 2011 almost cancelled out all of the gains made during the first three quarters of the year.
“A sharp rise in male full-time employment in the September quarter exaggerated the fall in full-time employment this quarter. Although there was a fall over the December quarter, full-time employment increased slightly [by 2,000] over the year,” Stats NZ industry and labour statistics manager Dianne Ramsay said.
“These changes in full-time and part-time employment were reflected in a fall in the hours worked. Both actual hours and usual hours worked fell – 1.4% and 0.9%, respectively. The fall in actual hours ollows a September quarter peak in actual hours that was similar to that for male full-time employment,” Ramsay said.
Meanwhile the number of people not in the labour force, meaning they were not employed or looking for work, rose by 11,000, or 1%, to 1.107 million over the December quarter, Stats NZ said.
Unadjusted figures showed the largest increases in those not in the labour force over the year to December 2011 were in the 20-24 and 65+ years age groups, Stats NZ said.
“These increases reflected a rise in the number of younger people choosing to study, and an ageing population,” Stats NZ said.
The labour force participation rate was 68.2% in the December quarter, down from 68.4% in the September quarter.
Reaction
ASB economist Jane Turner said the December quarter Household Labour Force Survey indicated the recovery in the NZ labour market was fairly soft heading into the end of 2011.
The 0.1% employment growth nationwide was weak, with the effects of the earthquakes were reflected in a continued decline in employment in Canterbury.
"Nonetheless, employment excluding Canterbury increased just 0.2%, highlighting the subdued nature of the recovery in employment demand," Turner said.
"In addition to this, the number of hours worked fell sharply over Q4, down 1.4%, along with a decline in ‘usual’ hours worked of 0.9%. This underpinned the shift of the labour force back into part-time employment (which increased 3%) from full-time employment (which declined 0.8%)," she said.
"StatsNZ note that the sharp drop in hours worked in Q4 does follow a reasonably strong pick up over Q2 and Q3, and that much of this pattern was led by Auckland. This does suggest that increased hours worked over this period and the subsequent decline in Q4 may have been due to the Rugby World Cup tournament," Turner said.
The fall in the unemployment rate was entirely due to a decline in participation, and largely in Canterbury. Participation was likely to bounce back over the coming quarters, particularly as a start to rebuilding activity generated a recovery in Canterbury, she said.
The Reserve Bank would look through the decline in the unemployment rate, as it was driven by a statistical quirk, and focus on the weakness in employment growth.
"Over the past year, the recovery in the labour market has been barely enough to offset growth in the population, with the unemployment rate remaining reasonably elevated. Coupled with a subdued growth outlook, and potential for further delays to the Canterbury rebuild, the outlook for the labour market recovery remains gradual," Turner said.
"The Q4 labour market report reinforces other recent NZ data which suggests there is little urgency to increase the OCR, and we continue to expect the RBNZ to leave the OCR on hold until at least December 2012," she said.
(Updates with ASB reaction)
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13 Comments
The media release is disingenuous.
Table 3 of the data release clearly shows that the revised September 2011 unemployment rate was 6.4%. Therefore the drop in unemployment over the Dec 2011 quarter was just 0.1%.
BUT how can that even remotely be seen as relevant when the absolute sampling error is 0.5 (ie the actual unemployment rate is likely between 5.8% and 6.8%).
MOREOVER in the same quarter unemployment amongst males rose from 6.1% to 6.5%, while female unemployment fell from 6.8% to 6.1%! All very much an unlikely occurrence.
SO why does such data even warrant comment? It can only reflect big movements not small directional transience.
With a total 0.1% movement in the last two quarters and the unemployment rate potentially being completely stationary for the past two years (entirely within the margin of error), we can at best say that unemployment rates are essentially static.
At most we might say that over the past 2 years unemployment rates have fallen from 6.7%+/- to 6.4%+/- which is nothing to really gloat about.
MORE INTERESTING FROM THE HLFS IS THE DEPOPULATION OF CANTERBURY.
The HLFS (table 6) shows that Canterbury's working age population was down nearly 31,000 since the Feb quake or -6%.
It also shows that the number of employment people in Canterbury is down 28,000 since the September quake or -8.3%.
THAT'S YOUR HEADLINE BERNARD:
STATS NZ FIGURES SHOW THE NUMBER OF PEOPLE EMPLOYED IN CANTERBURY IS DOWN 8.3% SINCE SEPTEMBER EARTHQUAKE.
Can we extrapolate and say since ChCh's population is about 370k of Canterbury's 560k. Then ChCh's employed population pre quake was 66% of 337k which is 222,000.
As most of the job losses were in ChCh and many job gains would have been made in outlying areas (Timaru, Ashburton, Rangiora etc), then potentially all 28,000 job losses occurred in ChCh hence ChCh has lost 12.6% of its jobs.
Stats NZ figures potentially show ChCh has lost 1 in 8 jobs!
I know there are big margin of errors on this but still it shows us something. Perhaps a glimmer of truth!
"Meanwhile the number of people not in the labour force, meaning they were not employed or looking for work, rose by 11,000, or 1%, to 1.107 million over the December quarter"...
I found this most interesting... 11k less people actually working/looking for work, 11k more people being supported by benefits... 22k difference. = lower tax take = more borrowing... but hey, high NZ$, we can borrow bucketloads instead of more bucketloads, aren't we doing well...
I wouldn't read much in to these figures.
Where is the rate going now that tens of thousands of students have graduated since December?
Where is the rate going now that job opportunities in Aus are shrinking, meaning there is less opportunity for Aus to relieve the NZ employment situation?
Where is the rate going as key aspects of the economy - construction, housing, retail - remain sickly?
I maintain the view that unemployment will be close to 7% by year's end.
Any ideas on the expected number of retiring baby boomers each month, compared to the actual retiring, going forward we seem to be able to guess the retirees from which we should then be able to forecast unemployment. i.e. if more people retire from the workforce than enter it, plus the given the exodus of workers, shouldn't unemployment fall ?
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