New Zealand unemployment rate steady, beats estimates
Wellington: New Zealand’s unemployment rate remained unchanged at 6.0 percent in the first quarter of 2014 as the job-seeker participation rate hit record levels, data released Wednesday showed.
Statistics New Zealand figures showed the jobless rate in January-March was static, despite market expectations it would fall to 5.8 percent.
But analysts said the headline rate was skewed by a sharp rise in the participation rate - the proportion of the labour force either in work or actively seeking employment - which jumped 0.4 points to an all-time high of 69.3 percent.
Although an increase in the participation rate is a sign of a strengthening economy, it also pushes up the number of people officially listed as unemployed as more people resume the search for work.
TC Securities head of Asia-Pacific research, Annette Beacher, said the high participation rate indicated confidence in the New Zealand economy was strong, contrasting it with a participation slump in the United States (62.8 percent) and Australia (64.7 percent).
“If the participation rate remained unchanged, the unemployment rate would have slid to 5.5 percent,” she said.
Beacher said employment growth also accelerated to 3.7 percent in the 12 months to March, the strongest in a decade, as about 84,000 new jobs were created, half of them in the construction sector.
She said the strong underlying labour force data meant the central bank was likely to continue its policy of lifting interest rates to contain inflation as New Zealand’s economic recovery gains momentum.
The Reserve Bank of New Zealand raised the official cash rate (OCR) 0.25 points to 3.0 percent in April, the second hike in as many months, with New Zealand the first advanced economy to tighten monetary policy since 2012.
Beacher said the OCR was set to rise to 3.25 percent next month and 3.75 percent by year’s end, peaking at 4.5 percent at the end of 2015.
New Zealand’s economy grew an estimated 3.5 percent in the year to March, fuelled by high prices for its agricultural exports, particularly from China, and a booming construction sector.