By Bernard Hickey
Statistics NZ has reported the unemployment rate fell to 6.2% in the September quarter from 6.4% in the June quarter, which was a touch better than the consensus economist forecast for a fall to 6.3%.
Seasonally adjusted employment growth of 27,000 or 1.2% for the quarter was also much better than the consensus forecast of growth of around 0.5%.
The only reason unemployment did not fall further was a rise in the participation rate to 68.6% from 68.1% in the June quarter.
The unemployment rate has fallen from 7.2% over the last year.
The number of unemployed fell 4,000 to 150,000 in the quarter, with female unemployment the biggest faller (down 4,000). Unemployment has fallen 23,000 over the year.
The New Zealand dollar immediately jumped 30 basis points to 83.6 USc after the jobs figures, which are seen increasing the pressure on the Reserve Bank to lift the Official Cash Rate to control inflation pressures earlier and more than expected before the figures.
Two year wholesale interest rates, which are the basis for fixed mortgage rates, rose 4 basis points.
However, Statistics NZ also reported wage growth being restrained. Annual wage inflation, as measured by the labour cost index (LCI) salary and ordinary time wage rates, fell to 1.6% in the September quarter from 1.9% in the same quarter a year ago.
"Subdued wage inflation follows a period of higher unemployment during 2012 and coincides with low consumer price inflation," Industry and Labour Statistics Manager Diane Ramsay said.
The Household Labour Force Survey showed the main contributors to the 2.4% or 54,000 growth over the year in employment were rises in the retail trade, and accommodation and food services industry group (up 25,200 people – 7.6 percent) and in the construction industry (up 11,200 people – 6.7 percent).
"These increases were partly offset by a decline in the agriculture, forestry, and fishing industry group. Employment in this industry group reached its lowest level since September 2009, down 18,300 (12.0 percent) to 138,700 people. However, this fall was exaggerated by an unusually large rise in employment in this industry in the September 2012 quarter," Statistics NZ said.
Full time jobs rose 17,000 or 1% over the quarter, while part time jobs rose just slightly and are still below where they were a year ago. The NEET (Not in employment, education or training) for 15-24 year olds fell 0.7% to 11.4% in the September quarter, its lowest rate since the December 2008 quarter.
Auckland, Canterbury wins
Auckland employment grew 55,000 in the year to the September, meaning in net terms all of New Zealand's jobs growth in the last year has been in Auckland. Canterbury employment rose 6,500 during the year, while unemployment there fell 3,200.
"The increase in Canterbury employment included a 9,900 rise in the retail trade, and accommodation and food services industry group and a 4,200 rise in the construction industry," Statistics NZ said, noting however this was partly offset by a 6,700 fall in employment in the agriculture, forestry, and fishing industry group.
Excluding Auckland and Canterbury, employment in the rest of New Zealand fell over the year to the September quarter.
Flat wage growth
Statistics NZ's Labour Cost Index survey showed salary and ordinary time earnings rose 1.6% in the September quarter from a year ago, falling from a 1.7% annual rate in the June quarter. Overtime wage rates rose 2.2% from a year ago, unchanged from the June quarter.
Just 54% of the salaries and ordinary time wages in the sample rose during the year. The median wage increase was 2.5%, the lowest since the December quarter of 2000. The mean annual increase of 3.3% was the lowest since the September 2000 quarter.
Canterbury construction industry wages rose 3.7% for the year, while construction wages in the rest of the country fell to 1.6% from 2.1% in the June quarter.
Economist reaction
Westpac Economist Dominick Stephens said the employment growth showed surprising momentum, but the Reserve Bank would take the numbers in its stride and still hike the OCR in April, as Westpac is forecasting. Wage growth remained contained and there were few signs of construction sector inflation spilling over into the rest of New Zealand, Stephens said, pointing to construction sector wage inflation outside Canterbury of just 1.6%.
"The lagged effects of spare capacity and low overall inflation continue to weigh on wage growth," he said.
ASB Economist Jane Turner said the jobs growth in the retail, food and beverage sector was consistent with a broader pick-up in consumer confidence and spending, while the subdued wage growth of 0.4% over the quarter reflected the lagged effect of weak consumer price inflation "as many wage increases are tied to past CPI movements."
"We are seeing the underlying conditions in the labour market tighten and over time this will feed into stronger wage inflation pressures," Turner said.
She said the survey may understate the strength of employment demand in Canterbury, and therefore the overall market.
"The RBNZ may be wary of the weakness in wage inflation. However, given the recent lift in CPI, the RBNZ can be confident inflation pressures have turned," she said, adding ASB was sticking with its forecast for the first OCR hike being in March next year.
(Updated with more detail, economist reaction, market reaction, chart below)
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21 Comments
Interesting - utilising US Federal Reserve metrics an unemployment rate at this level (6.2%) would give cause to initiate an upward move of the targeted official short term interest rate level.
The Fed wants the nation’s unemployment rate to hit 6.5 percent before it begins raising rates. So far this year, the jobless rate has fallen from 7.9 percent to 7.2 percent. Read more
How long do suffering NZ funders of rising asset values have to remain under rewarded at record low, emergency level rates of return?
Updated with more detail on jobs growth. Most of it is coming in low wage areas of fast food, hotels and retail, which might explain the surprisingly weak wages growth figure.
A good chunk of the rest of the jobs growth is in higher wage construction.
cheers Bernard
Others have noticed.
...It was above the OECD average on most counts, a notable exception being average household net-adjusted disposable income.
For New Zealand households that figure was $US21,892 ($NZ26,310) a year, against the OECD average of $US23,047, putting it 20th of 36 countries.
There was social inequality - a considerable gap between the richest and poorest existed, with the top 20 per cent earning five time more than the bottom 20 per cent.
Not only did New Zealanders earn less on average, some of them had poor work-life balance, with 13 per cent of employees working very long hours - the average was just nine per cent, putting New Zealand 28th of 36 countries. Read more
No matter how hard the nay-sayers and gloomsyters try to run down our wonderful country, the facts tell a different story:
"Life is better in New Zealand, with the country doing ''exceptionally well'' in overall well-being, an OECD report says
The Organisation for Economic Co-operation and Development (OECD) assessed more than 30 countries across 11 measures seen as contributing to well-being - health, education, safety, and environment among them.
OECD members are largely nations with well developed economies.
More than eight of 10 of New Zealanders (83 per cent) said they had life satisfaction, with more positive experiences than negative ones (pain, worry, sadness and boredom) on an average day."
http://www.stuff.co.nz/national/9368290/Kiwis-living-the-good-life
"Life is better in New Zealand, with the country doing ''exceptionally well'' in overall well-being, an OECD report says
Well I would never have guessed!!
Of course we are compared to most other OECD countries. Look beyond how we compare to them and address the statistics that affect us as a nation.
Youth unemployment for one strikes me as a concern particularly as our unemployment figures appear to be dropping. We're just thankful we have a small population relative to other countries... 17% of 4.5 million looks much better compared to the UK of 65 million in terms of 'actual' people out of work.
The work-life balance stat is a stark reminder of folk working longer hours to make ends meet, probably holding down two jobs on minimum wage... or alternatively a couple paying off an excessive mortgage.
Still, I'm glad I live here with my family in a country that is friendly and holds onto a community spirit...
No matter how hard the nay-sayers and gloomsyters try to run down our wonderful country, the facts tell a different story:
Well that's because your living in a different Country Big Daddy ( do you have to keep that Nom.?..it's almost pervy just to type it ) anyhoo where was ...oh yes , different Country.
In the Utopia that is the most overheated property market in the Southern hemisphere for starters, you could be forgiven that the milk n honey flows right out of the ground , as you appear to do, but , Colossal Patron, I fear it is not the same Country the average citizen stuggles along in trying to keep ahead of the debt and provide a dignified existence for their families.
So please don't quote scewed statisics as facts, facts are actualities occuring in real time on all levels, as variable as the staistician cares to break.....it...down.
Please note Stephen Hulme's post earlier, are rhey not also collected data...?stated as sampled facts....it's just that they don't suit your demographic and so you dismiss it as naysaying.
it is understandable for me , that as involved in property as you appear to be, you can see only the world about you through that perspective. if I can see that maybe you could bring yourself to see it's not a bed of roses for the bigger portion of the population, the average, the stuggling to be average, the poor, and jobless.....eh?
BTW....it is a wonderfull country, becoming less so in many ways .
Overall a good result, although reading the comments here you would not think so! Does not fit with the Labour/Greens meme of what a shit country we live in.
Low paying jobs are better than nothing and some of the higher paying jobs are the type Greenies detest as it adds to the countries GDP and will have some O&G component in Taranaki.
On the whole NZ is travelling better than most countries we get compared to, but the left want us to think we are not. Things are not perfect.
In my business I have found a good up-tick in volumes in the past 3 months, better than I hoped for mid year. This is in chemicals.
Agree with you The best status symbol is a mortgage free house , and with BigDaddy above ....
.. the Hickeysterical brigade will never be happy unless every last one of us is on a mega-dollar salary with either XERO , or in some stoopid government department ...
No one left to perform the myriad of everyday tasks within the service sector ...
... and there's the implied assumption that no one in service or retail jobs enjoys their work , and that they are all unwillingly stuck there for life ...
The thankless job of government in the age of entitlement.
I learned very early in my career most after sales service industries are a loosing wicket. Even if you magically appear the second after a failure and fix it in another second flat - instead of thankyou they say 'it shouldn't have broken anyway'.
Sort of. We can extend and pretend until we hit the Greece/Ireland/Cyprus scenario or reset to a low debt economy with a jubilee Keen style with a universal payment to everyone, even the debt free to get around moral hazard. Important caveats:
Money has to be applied to debt retirement first, mortgage, business, student, rural, consumer
The amount of money generated has to be matched by a restriction of an equivalent amount (or more) of future bank credit. Banks cannot relend money repaid.
Bank credit becomes full reserve. Credit money cannot be created by a bank loan. They can only intermediate prior earnings. Banks would shrink in size and influence
The RB determines the level of public credit available to the government of the day to spend into existence, controlling inflation/deflation with interest free money supply rather than trying to control demand for credit indirectly with interest rates. Let the market set interest rates. If governments want additional spending they have to tax rather than borrow.
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