NZ dollar falls; drop in jobless masks weak labour market
NZ dollar falls; drop in jobless rate masks weak labour market
By Paul McBeth
Feb. 7 (BusinessDesk) - The New Zealand fell after a fall in the headline unemployment rate masked underlying figures showing a weak labour market, and spooking investors who have been upbeat about the local economic recovery.
The kiwi fell to 83.52 US cents at 5pm in Wellington from 84.17 cents at 8am and 84.45 cents yesterday. The trade-weighted index dropped to 75.68 from 76.38 yesterday.
New Zealand's unemployment rate fell to 6.9 percent in the December quarter from a 13-year high in the September period, as an increasing number of people left the labour force. The participation rate fell to 67.2 percent, its lowest level in almost nine years and employment shrank 1 percent in the three months ended Dec. 31. Economists had been expecting perkier numbers as businesses ramp up hiring in the face of the Canterbury rebuild.
"The market was in the mood to play up the negatives in the employment release and that took the gloss of the currency," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "The labour market numbers provided food for thought for the kiwi dollar."
The local figures came out before Australian employment data, which showed the unemployment rate held at 5.4 percent across the Tasman as the number of jobs grew by 10,400 in December. While the headline figure is better across the Ditch, Australia's participation rate of 65 percent is below New Zealand's. The kiwi dollar fell to 80.99 Australian cents from 81.55 cents yesterday.
The fortunes of the trans-Tasman neighbours has been shifting in recent months, with a peak in Australia's mining boom coming in view and New Zealand's $30 billion-plus reconstruction effort in Canterbury gathering momentum.
That's seen the respective central banks in different phases, the Reserve Bank of Australia seen as likely to cut rates next month, while New Zealand's central bank on hold with its next move expected to be a hike.
The local currency dropped to 77.99 yen
from 79.20 yen yesterday, and declined to 61.84 euro cents
from 62.20 cents. The kiwi fell to 53.37 British pence from
53.94 pence yesterday.