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Falling New Zealand unemployment rate greeted with caution

Xinhua, February 3, 2016 Adjust font size:

New Zealand's unemployment rate has bucked expectations and fallen from 6 percent to 5.3 percent over the December 2015 quarter, according to figures from the government statistics agency Wednesday.

The unemployment rate, which show 16,000 fewer people were jobless than in the September quarter, was the lowest since March 2009, said Statistics New Zealand.

"Although the number of employed people has risen, there was also growth in the number of people not participating in the labor market," labor market and households statistics manager Diane Ramsay said in a statement.

"This has contributed to labor force participation falling for the third quarter in a row."

Over the December quarter, employment grew 0.9 percent, after falling in the previous quarter, resulting in annual employment growth of 1.3 percent.

Meanwhile, annual wage inflation eased to 1.5 percent last year, the lowest since the year to the March 2010 quarter, while annual consumer price inflation was just 0.1 percent.

Tertiary, Education, Skills and Employment Minister Steven Joyce said the construction industry had led the way in the economy creating 21,000 additional jobs in the December quarter.

"This quarter's unemployment rate is better than nearly all commentators anticipated. While that measure will continue to move around each quarter, the job growth and employment figures for New Zealand continue to be strong relative to nearly all other developed countries," Joyce said in a statement.

However critics said the falling labor participation rate showed the economy was failing to keep pace with the growing labor force and warned it would worsen as economic growth slowed.

The working age population grew by 2.3 percent last year, but employment grew only 1.4 percent, said the Council of Trade Unions (CTU).

"The unfortunate fact is that the economy is still not creating enough jobs to match the increase in the working age population, which is swollen by the highest annual net immigration in 25 years," CTU economist Bill Rosenberg said in a statement.

"Joblessness, a wider measure of people unable to find work, has risen over the year from 257,600 to 259,400. Even at 5.3 percent, or 133,000 people, unemployment is far too high for an economy that has been growing strongly for several years," Rosenberg said.

The figures came on the back of another drop in global dairy prices, raising the real prospect of three years of no profits for dairy farmers and flow-on effects for their communities, finance spokesperson for the main opposition Labour Party, Grant Robertson, said.

"This is the third quarter the participation rate has gone down, meaning people are walking away from the labor market. This contributes to a lower unemployment rate," Robertson said in a statement. Endit