New Zealand employers added the most workers on record in the three months through March, driving the kiwi to erase losses triggered yesterday by the central bank’s announcement of intervention to weaken it.
Employment surged 1.7 percent, or 38,000 jobs, from the fourth quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of 11 economists was for a 0.8 percent gain. The jobless rate fell to a three-year low of 6.2 percent, less than the 6.8 percent predicted by economists.
Governor Graeme Wheeler is resorting to currency intervention and lending restrictions to steer the economy as surging house prices rule out interest rate cuts and the kiwi’s strength bars rate increases. He has signaled he won’t raise the official cash rate from a record-low 2.5 percent this year.
“We expect the RBNZ to stay the course and remain neutral for now,” Alvin Pontoh, a Singapore-based Asia-Pacific strategist at TD Securities Inc., said in a note. “However, a sustained improvement in the data combined with a hot housing market will force the RBNZ to lift the cash rate in December.”
The kiwi dollar bought 84.54 U.S. cents at 12.02 p.m. in Wellington from 84.09 cents immediately before the report. The currency fell to a five-week low yesterday. The yield on the two-year interest rate swap rose 3.5 basis points, or 0.035 percentage point, to 2.83 percent.
House prices rose 7.1 percent in April from a year earlier, the biggest increase since early 2008, Quotable Value New Zealand, a government property research company, said in an e-mailed statement today.
Wheeler on April 24 held rates and said he expected to keep borrowing costs unchanged through the end of the year. The central bank in March forecast employment would fall 0.5 percent in the first quarter from a year-earlier and the jobless rate would be 6.7 percent.
Employment rose the most since records began in 1989 after falling 1 percent in the three months through December. From a year earlier, employment increased 0.3 percent, today’s report showed. Economists expected a 0.7 percent decline.
The labor force participation rate rose to 67.8, matching economists’ expectations, from 67.2 percent in the fourth quarter. The jobless rate in the final three months of 2012 was revised to 6.8 percent from 6.9 percent.
Business confidence gained in the first quarter, according to a survey by the New Zealand Institute of Economic Research.
Jobs growth was led by manufacturing, professional services including census workers, and repair and maintenance, the report showed, without adjusting for seasonal patterns.
The economy is also being underpinned by a NZ$40 billion ($33.8 billion) rebuild of earthquake-damaged Christchurch.
In Christchurch and the surrounding Canterbury region, companies are hiring to assist with the rebuild of homes, roads and commercial buildings damaged in quakes in 2010-11. Employment in the region climbed 0.6 percent from the year-earlier quarter, twice the pace of national growth, today’s report showed.
Nationally, full-time employment rose by 31,000 jobs, or 1.8 percent, from the fourth quarter, according to today’s report. Part-time employment increased by 7,000, or 1.3 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 jumped 3.2 percent from the fourth quarter and 3 percent from a year earlier, today’s report showed.