By Rebecca Howard
May 1 (BusinessDesk) - New Zealand’s unemployment rate nudged lower while annual wage inflation ticked slightly higher, largely on the back of several collective agreements including the nurses’ agreement last August.
The seasonally adjusted unemployment rate fell to 4.2 percent in the three months ended March. 31, from 4.3 percent in the December quarter, Stats NZ said in its household labour force survey.
Economists surveyed by Bloomberg had tipped the unemployment rate to fall to 4.2 percent. The central bank had also tipped unemployment to be 4.2 percent in the March quarter.
The New Zealand dollar fell to 66.35 US cents from 67.75 just ahead of the data.
“The unemployment rate has been mostly trending down since the global financial crisis in 2008,” said labour market and household statistics senior manager Jason Attewell. The unemployment rate touched a 10-year low of 4.0 percent in the September quarter last year.
The unemployment rate for men fell to 3.9 percent in the March quarter from 4.4 percent last quarter. For women, it was 4.5 percent versus 4.2 percent.
The employment rate was 67.5 in the March quarter versus 67.8 percent in the December quarter.
Attewell noted that employment growth tends to lag broader economic growth by about three months. “New Zealand has seen a softening of economic growth as measured by gross domestic product over the last six months, we are now seeing that softening come through the employment rate,” he said.
The number of employed people eased 0.2 percent in the quarter to 2.658 million and was 1.5 percent higher than a year earlier.
Wage inflation, meanwhile, remained fairly tepid.
According to Statistics NZ, private sector wage inflation – including overtime - rose 0.3 percent in the quarter for a 2 percent annual increase. Economists had expected a 0.5 percent lift.
Public sector wage inflation was up 0.6 percent in the quarter for a 2.0 percent annual gain.
Across both sectors, wage inflation rose a quarterly 0.4 percent and an annual 2.0 percent.
The annual rise was higher than the annual 1.5 percent lift in consumers price index in the March quarter. Stats NZ noted, however, wage inflation has been boosted by several collective agreements signed last year. Along with the nurses’ agreement, other collective agreements were reached with the New Zealand police as well as with welfare and social workers.
There are likely be further increases to wages over the next couple of quarters as ongoing pay disputes are settled and the minimum wage increase of $1.20 to $17.70 an hour on April 1 flows through, said Attewell.
Overall, the ongoing subdued wage inflation picture will likely add to the view that the central bank will continue to indicate that its next move is likely to be a rate cut but, given it was largely as it expected, it may not be enough to spur a cut as early as next week.
New Zealand’s central bank now has the additional goal of "supporting maximum levels of sustainable employment within the economy" added to its goal of price stability.
Today's figures show the participation rate at 70.4 percent in the March quarter was down 0.5 percent points versus December and down 0.5 percentage points on the year.
The under-utilisation rate, which measures the country's potential labour supply and unmet need for work, fell 0.8 percentage points on the quarter to 11.3 percent. The rate was the lowest since December 2008, Stats NZ said.
Total actual hours worked rose 4.9 percent in the quarter to 91.8 million and were up 3.4 percent on the year.
The quarterly employment survey, also released today, showed private sector ordinary time average hourly earnings rose 1.1 percent to $30.00 in the March quarter and were 3.7 percent higher than a year earlier. Public sector ordinary time wages rose 2.0 percent to $40.33 in the March quarter and lifted 2.8 percent on the year.
The working age population numbered a seasonally adjusted 3.94 million in the March quarter.