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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news