New Zealand employers hired workers at a faster pace than economists forecast in the three months through March and more people entered the workforce, adding to the case for the central bank to raise interest rates again.
Employment increased 0.9 percent, or by 22,000 jobs, from the fourth quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of 10 economists was for a 0.6 percent gain. The jobless rate was unchanged at 6 percent as labor force participation rose to a record. Economists expected 5.8 percent unemployment.
Jobs growth and a lift in business confidence suggest pressure will build on wages and inflation in coming quarters, adding to signs Reserve Bank Governor Graeme Wheeler will raise the official cash rate at his next review on June 12. Last month, he increased borrowing costs to 3 percent, his second quarter-point rise in two months.
“The improvement in the unemployment rate over 2014 is likely to be gradual,” Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland, said ahead of the report. “While there should be good job gains, the supply of labor will also be growing strongly.”
The kiwi dollar declined after the report. It bought 86.99 U.S. cents at 10:58 a.m. in Wellington. There was an 88 percent chance of a rate rise on June 12, according to swaps data compiled by Bloomberg at 9 a.m.
Employment rose by 84,000, or 3.7 percent, from the year-earlier quarter, the most since the series began in 1986, today’s report showed. Economists forecast 3.4 percent. Growth was led by construction, retail and hospitality workers, the report showed.
The RBNZ in March forecast employment (NZLFQOQ) would rise 3.5 percent in the first quarter from the year earlier. It projected the jobless rate would drop to 5.6 percent, declining to 5 percent by the end of 2014.
The jobless rate was higher than expectations as the labor force participation rate rose to a record 69.3 percent from 68.9 percent in the fourth quarter. Economists forecast 68.9 percent. More people were seeking work and successfully finding jobs, the statistics office said.
Ordinary time wages for non-government workers rose 0.3 percent from the fourth quarter, according to the Labour Cost Index also published by the statistics agency today. Economists expected a 0.5 percent increase.
To contact the reporter on this story: Tracy Withers in Wellington at firstname.lastname@example.org