New Zealand employers unexpectedly cut payrolls for a third straight quarter, the longest slump since the 2009 global recession, sending the local currency and bond yields lower as job seekers gave up searching for work.
Employment slumped 1 percent, or 23,000 jobs, from the third quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of eight economists was for a 0.4 percent gain. The jobless rate fell to 6.9 percent from 7.3 percent as workforce participation reached the lowest in eight years.
The nation’s currency headed for its first weekly fall this year as a deteriorating labor market underscored weak domestic demand that may prompt Reserve Bank of New Zealand Governor Graeme Wheeler to extend a period of record-low borrowing costs. Last week, he said the exchange rate’s strength was affecting the nation’s exporters and manufacturers, some of which have elected to shutter plants and fire workers.
“The ongoing fallout from the high currency is likely to weigh on the employment recovery,” Sharon Zollner, economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. There are “signals of a strong discouraged-worker effect,” she said.
The kiwi dollar extended declines, falling as low as 83.83 U.S. cents after the data, the least since Jan. 31. It bought 83.94 cents at 11:58 a.m. in Wellington. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, fell 3 basis points to 2.89 percent.
Employment fell for three straight quarters for the first time since the January-September period in 2009, today’s report showed. From a year earlier, employment declined 1.4 percent, the first year-on-year drop since the first quarter of 2010.
The report showed the largest fall in the labor force participation rate since the series began. It slumped to 67.2 percent from 68.4 percent in the third quarter, reaching the lowest since the third quarter of 2004.
The central bank has kept borrowing costs at a record-low 2.5 percent since March 2011. Investors are pricing in a more than 90 percent chance he will hold the benchmark rate until September, according to interest-rate swaps data compiled by Bloomberg.
Solid Energy New Zealand Ltd., the state-owned coal miner, announced in October that 220 workers at its Spring Creek mine will lose their jobs. Norske Skogindustrier ASA, Europe’s third-largest maker of publication paper, is cutting 110 jobs at a plant in the central North Island after scaling back operations.
Still, construction companies are hiring in Christchurch and the surrounding Canterbury region where earthquakes in 2010-2011 caused an estimated NZ$30 billion ($25 billion) of damage to homes, roads and commercial buildings, today’s report showed.
Employment in the region rose 5.2 percent from the year-earlier quarter, today’s report showed. Excluding Canterbury, annual employment growth fell about 2.5 percent, officials estimated.
Nationally, full-time employment rose by 7,000 jobs, or 0.4 percent, from the third quarter, according to today’s report. Part-time employment declined by 31,000, or 6 percent. Statistics New Zealand adjusts the full- and part-time employment figures separately, which means they may not add up to the total change in employment.
Total actual hours worked per week fell 0.1 percent from the third quarter and 1 percent from a year earlier, today’s report showed.
Hours worked in Canterbury gained 5.7 percent from the year-earlier quarter, the report showed. Excluding the region, hours worked across New Zealand dropped 2 percent.