Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ jobless rate spike stokes talk of Reserve Bank rate cuts

NZ jobless rate spike stokes talk of Reserve Bank interest rate cuts

By Paul McBeth

Nov. 8 (BusinessDesk) - New Zealand's 13-year high unemployment rate has opened the door for the Reserve Bank to cut interest rates to help underpin growth in an economy recovering from the deepest recession in two decades.

The household labour force survey today showed the unemployment rate unexpectedly rose half a percentage point to 7.3 percent in the September quarter. Economists surveyed by Reuters were picking the headline rate to ease to 6.7 percent from 6.8 percent.

Markets are giving central bank governor Graeme Wheeler a 22 percent chance of cutting the official cash rate at the December monetary policy statement, according to the Overnight Index Swap curve, up from 12 percent yesterday. The New Zealand dollar dropped to 81.93 US cents after the employment data, from 82.56 cents immediately before as the prospects for a rate cut grew

"There's definitely a message in the HLFS - the economy is not doing as well as people thought," said Darren Gibbs, chief economist at Deutsche Bank. "Rates are certainly not restrictive and may be stimulatory, but are they stimulatory enough?"

The Reserve Bank has kept the benchmark rate at 2.5 percent since cutting half a percentage point to shore up confidence after last year's February earthquake in Canterbury levelled much of the country's second-biggest city.

Former governor Alan Bollard had indicated he would lift the rate later that year, but shelved those plans after Europe's sovereign debt crisis intensified, stoking fears of another global financial meltdown.

The HLFS has shown rising unemployment for the past three quarters. The number of people employed fell 0.4 percent to 2.22 million in the second quarterly decline, while the participation rate was unchanged at 68.4 percent.

New Zealand’s labour market has been struggling to recover from recession, with employers more keen on taking on part-timers and casual staff than hiring permanent full-time workers.

Just today, Dynamic Solutions of Christchurch said it will shed 40-60 jobs as it winds down its contract manufacturing business. That comes two days after Auckland manufacturer Rakon said it would cut up to 60 jobs as it shifts more work overseas.

Auckland’s unemployment rate rose 1.3 percentage points to 8.6 percent, with the number of people employed in New Zealand’s biggest city at 691,200, the fewest since June last year.

Nationally, full-time employment shrank 0.8 percent to 1.7 million while part-timers rose 1.4 percent to 519,000.

The number of jobless, which includes people who might not be actively seeking work, rose to 294,900 from 271,200, while underemployment, which counts people who are part-time but want to work more hours, rose to 113,300 from 109,500.

Workers in professional, scientific, technical, administrative and support services recorded the biggest decline in jobs, falling to 249,400 from 259,300 in the June quarter, while manufacturing shed 6,100 jobs to 240,400. The number of people working in construction fell to 166,600 from 171,300.

Total hours worked shrank 0.8 percent to a seasonally adjusted 73.18 million and were down 2 percent from a year earlier.

Youths aged 15 to 24 not in employment, education or training (NEET), a target demographic for the government, rose to 13.4 percent from 13.1 percent in the June quarter.

Canterbury’s labour market continued to improve, with the unemployment rate down 5.2 percent, from 6.5 percent in the June quarter. Waikato and the Tasman, Nelson, Marlborough, West Coast regions were the only other areas to show a lower jobless rate.

Northland recorded the highest unemployment rate at 10 percent.

Today’s figures come after the quarterly employment survey showed total filled jobs rose 0.3 percent to a seasonally adjusted 1.715 million, bolstered by a pick-up in part-time workers and a decline in full-time equivalents to 1.35 million.

Gibbs said the difference between the two surveys could be squared up, as the QES doesn't include self-employed people, while the HLFS does. The number of self-employed people dropped 8.1 percent in the year ended Sept. 30.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news