Unemployment exceeds 100,000

BY DAVID HARGREAVES
Last updated 15:37 04/02/2009

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LATEST: Economists seem prepared to dismiss a shock rise in employment to record levels as a statistical anomaly and say the jobs market looks bleak in the near future.

Contrary to all expectations, Statistics New Zealand's Household Labour Force Survey for the December quarter showed that the number of Kiwis in work rose 0.9 percent to a new high of 2.19 million. However, a number of the extra jobs were part-time.

Closer to expectations, but on the low side, was a rise in the number of unemployed to 105,000 from 94,000. That's the highest number out of work in over six years and brings the unemployment rate up to 4.6 percent from 4.2 percent.

The apparent contradiction whereby both employment and unemployment levels rose can be explained partly through population growth due to migration and also by more people entering the workforce. The labour force "participation rate" rose by 0.6 percent to 69.3 percent in the quarter.

JP Morgan economist Helen Kevans said she believed the sharp jump in part-time workers was owing to worker hours being cut back, or previously non-working members of the household returning to the workforce in an effort to make financial ends meet.

The number of hours worked per week in the quarter fell by 1.9 percent.

ASB economist Jane Turner said while the rise in the employment figure was good news - "we are inclined to look through the result".

"At the end of the day, there is an increase in those out of work and actively looking for work. . .

"Our inclination is to discount the result, even if in doing so we are turning our back on one of the few positive bits of recent news. We put more weight on the leading indicators, and see a strong likelihood of an outsized [employment] drop coming through in the first half of 2009 – probably the first quarter."

New Zealand's unemployment rate, while slightly higher than Australia's (4.4 percent) is still low relative to many other countries. For example unemployment in Britain is running at 6.1 percent and in the US 7.2 percent.

The last time New Zealand had 100,000 people out of work was during the September quarter in 2002 as the country's unemployment rate was undergoing a series of steep falls on the back of extremely supportive economic conditions.

Now, however, the situation is reversing and from a low point of 3.4 percent and just 77,000 jobless at the end of 2007, economists are now predicting an unemployment rate of around 7 percent by early next year.

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All the recent pointers had suggested the figures, by the standards of recent years, would be bad as the country's businesses grapple with an economy that has been in recession for the whole of 2008 and a global outlook that appears to deteriorate by the day.

A third of Kiwi firms responding to the New Zealand Institute of Economic Research's December quarter survey of business opinion said they intended to cut staff numbers during the next three months. That was the highest figure in that survey since 1991, a year in which the rate of unemployment hit 10.7 percent - its highest level in modern history.

SNZ said that in the December quarter part-time employment grew by 17,000, or 3.5 percent, with full-time employment up 6000, or 0.3 percent.

Male employment rose 12,000, or 1.1 percent, to reach 1.17m over the December quarter, the highest level recorded since the survey began.

The increase was entirely driven by a 13,000 increase in male part-time employment, while male full-time employment remained flat, SNZ said.

For the year to December, male employment was up 0.7 percent, with part-time employment up 11,000, or 7.7 percent, while male full-time employment fell by 3000, or 0.3 percent.

The December quarter also recorded the highest level of female employment since the survey began, increasing by 8000, or 0.8 percent, to 1.02m, with full-time employment up 0.8 percent and part-time up 1.3 percent.

Annually, female employment was up 1.2 percent, with full-time up 3000, or 0.4 percent, and part-time up 9000, or 2.5 percent.

Employment growth in the survey was concentrated in service-based industries, particularly education, and transport, storage and communications. The number of people working in agriculture, construction and manufacturing had fallen, SNZ said.

 

- BusinessDay.co.nz

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