New Zealand Fourth-Quarter Jobs Growth Builds Case for Rate RiseTracy Withers
New Zealand employers hired workers at almost double the pace economists forecast in the three months through December, adding to the case for an interest-rate increase as early as next month.
Employment increased 1.1 percent, or by 24,000 jobs, from the third quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of 12 economists was for a 0.6 percent gain. The jobless rate fell to 6 percent from 6.2 percent, matching the median forecast and reaching the lowest since mid-2009.
Faster 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 may start raising rates from a record-low 2.5 percent as early as March. Last month, he said borrowing costs will need to rise “soon” as domestic demand picks up and inflation accelerates.
“The labor market will be crucial for judging the economy and the path of monetary policy,” Craig Ebert, senior economist at Bank of New Zealand Ltd. in Wellington, said ahead of the report. A fall in the jobless rate “would certainly fit with the many other indications of a tightening jobs market,” he said.
The kiwi dollar maintained gains after the report. It bought 82.42 U.S. cents at 10:59 a.m. in Wellington, from 82.27 cents before the figures were released. There was a 100 percent chance of a rate rise on March 13, according to swaps data compiled by Bloomberg late yesterday.
Employment rose by 66,000, or 3 percent, from the year-earlier quarter, the fastest since mid-2006, today’s report showed. Economists forecast 2.4 percent. Growth was led by professional, technical and administration workers, the report showed, without adjusting for seasonal patterns.
The labor force participation rate rose to 68.9 percent from 68.6 percent in the third quarter. Economists forecast 68.6 percent. More people were seeking work and successfully finding jobs, the statistics office said.