New Zealand Jobs Accelerate as Caution Urged With New Surveyby
Government includes defense, reviews self-employment status
We cannot read ‘any implications’ from these results: ASB
New Zealand’s employment growth unexpectedly accelerated in the second quarter after changes to data collection, while the jobless rate fell.
Employment rose 2.4 percent from the first quarter, when it gained 1.3 percent, Statistics New Zealand said in Wellington Wednesday. The jobless rate fell to 5.1 percent from 5.2 percent. Analysts tipped 5.3 percent, according to the median forecast in a Bloomberg survey.
Statistics New Zealand said it began including defense force personnel in its survey and also reviewed employment status, which resulted in some people previously counted as self-employed now being included in the labor force. That means the second-quarter release represents a break in the series and level changes should be treated with caution, it said.
“While the magnitude of the changes due to new questions and any real changes in employment status cannot be quantified, other labor market indicators suggest there was real growth in employment in the quarter,” the agency said.
The New Zealand dollar initially jumped on the data before falling back to 72.78 U.S. cents at 11:40 a.m. in Wellington. It bought around 72.90 cents before the report.
“Statistics New Zealand is unable to distinguish whether it is genuine employment strength or merely the impact of surveying changes,” said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. “As such , we cannot read into the second-quarter results any implications about the strength of the economy or implications for the interest rate outlook.”
The second-quarter release also showed:
- The number of people unemployed fell by 1,000 to 131,000
- Employment rose 58,000 to 2.46 million
- Working-age population increased 32,000 to 3.72 million partly because defense force personnel were added
- Labor force rose 57,000 to 2.59 million
- Participation rate rose to 69.7 percent from 68.8 percent; analysts forecast 68.8 percent
- Employment rose 4.5 percent from year earlier vs median forecast of 2.3 percent
The data may add to signs of a tighter labor market which could help Reserve Bank Governor Graeme Wheeler’s efforts to lift inflation back to the middle of his 1-3 percent target band. Still, as the economy expands, employers are able to fill positions without big wage increases because of record numbers of immigrants seeking work.
The RBNZ last week said it expects the economy to grow faster than its potential, which will increase capacity pressures and may eventually boost prices. It estimated the jobless rate would fall to 4.8 percent by the first quarter of 2017 and 4.4 percent a year later.
Wheeler last week cut the official cash rate to a record-low 2 percent and said further policy easing will be required. All economists surveyed by Bloomberg expect at least a quarter-point cut by November.
In June, Statistics New Zealand revised jobless rate data lower after tightening its definition of unemployment to exclude those who look at vacancies online. The first-quarter rate was revised down to 5.2 percent from 5.7 percent.