New Zealand Employment Growth Unexpectedly Acceleratesby
Employment rose 1.2 percent from 4Q, twice estimated gain
Unemployment rate rises from 7-year low to 5.7 percent
New Zealand’s employment growth unexpectedly accelerated in the first quarter while the jobless rate increased as more people sought work.
Employment rose 1.2 percent from the fourth quarter, when it gained a revised 1 percent, Statistics New Zealand said Wednesday in Wellington. Economists had forecast a 0.6 percent increase, according to the median estimate in a Bloomberg News survey. The jobless rate rose to 5.7 percent from 5.4 percent; analysts tipped 5.5 percent.
New Zealand’s economy was unable to generate enough jobs as the labor force grew the most in more than 11 years, pushing the jobless rate higher. A slack labor market has hampered Reserve Bank Governor Graeme Wheeler’s efforts to get subdued inflation back to the middle of his 1-3 percent target.
“The first-quarter employment data appear strong, but suggest that spare capacity in the labor market is not yet a thing of the past,” said Nick Tuffley, chief economist at ASB Bank in Auckland, who expects the central bank to cut interest rates two more times this year. “Overall, the various labor surveys suggest that wage pressures are likely to remain subdued.”
The New Zealand dollar rose after the release. It bought 69.36 U.S. cents at 11 a.m. in Wellington from 69.18 cents immediately ahead of the report.
Wheeler last week said there were signs of capacity pressures building in the economy that may boost prices. He held the official cash rate at a record-low 2.25 percent while saying further policy easing may be required. All 15 economists surveyed by Bloomberg expect a quarter-point cut on June 9.
The fourth-quarter jobless rate was revised from 5.3 percent and was the lowest in seven years. The RBNZ in March forecast the jobless rate would be 5.5 percent in the first quarter.
Last month, it said the rate “is an inadequate indicator of labor market slack” and unveiled a new internal gauge which it said showed the labor market was broadly in balance at the end of last year.
Employment rose the most since the third quarter of 2013, the statistics agency said Wednesday. Still, the unemployment rate increased as even more people sought work, with the number of people unemployed jumping by 10,000 to 144,000.
- Employment rose 28,000 in 1Q
- Working-age population increased 29,000 to 3.69 million
- Labor force rose 38,000 to 2.54 million -- biggest increase since 2004
- Participation rate rose to 69 percent in 1Q from 68.5 percent in 4Q
- Employment rose 2 percent from year earlier vs median forecast of 1.3 percent
Record immigration is making it easier for employers to fill positions without raising wages, with annual net immigration rising to 67,620 in March.
Wages for non-government workers excluding overtime rose 0.4 percent from the fourth quarter, more than the 0.3 percent increase forecast by economists. From a year earlier, wages rose 1.8 percent, up from 1.6 percent in the year ended in the fourth quarter.