Govt admits job figures 'volatile'

A political war of words has broken out over jobs figures that have recorded an unexpectedly large drop in the unemployment rate.

The Household Labour Force Survey released yesterday, showed unemployment fell to 6.9 per cent in the last three months of 2012 from a previous 7.3 per cent. About 163,000 people were without jobs.

However, the number of people working or looking for jobs (the participation rate) also recorded the biggest drop since the survey began.

That means more than 30,000 people had left the workforce in the last three months.

The Labour party says this is because people have given up searching for work in a "stagnant economy".

"National's hands-off policies are forcing Kiwis to opt out of looking for work or head to Australia," finance spokesman David Parker said.

He pointed out 17,000 jobs were lost from the decline in manufacturing industries in 2012.

Green party co-leader Russel Norman said the slight fall of unemployment from record levels was "little to get excited about".

"Relative to the rest of the OECD, our economy is performing poorly," he said.

Manufacturers were "closing up shop" because of the high New Zealand dollar.

"National has handled the global downturn poorly causing unnecessary pain and suffering throughout the country," Norman said.

But the Government has called the survey's figures "volatile".

Employment Minister Steven Joyce said the December quarter survey reflected the on-going impact of tough economic times globally.

But he added: "It also demonstrates the volatility of the quarterly employment data which continues to move around."

The previous survey might have rated unemployment and participation too high, Joyce said, noting New Zealand's employment and participation rates were higher than Australia.

Most OECD countries had an average unemployment rate of 8.0 per cent, he added.

Some economists are also questioning if the survey is overly pessimistic.

BNZ economist Stephen Toplis told Radio NZ that other data showed the economy was in a better state and had created jobs.

"Business intentions are quite strong and that would be inconsistent with an exceptionally weak labour market," he said, adding that consumers were not lacking confidence.

"And they would be if they were losing jobs hand over fist," Toplis said.

"The housing market's doing okay.

"No, those things are what you'd expect if the labour market was as weak as these data would suggest."

Analysts from Barclays said it was hard to square the labour market numbers with other economic indicators.

"We had actually thought that the participation rate may have been pushed up a little by tighter work requirements for the government's Domestic Purposes Benefit," they said.

Unions suggested a drop-off in part-time work may lead more people to leave the workforce.

FIRST Union's general secretary Robert Reid said any economic recovery since the global financial crisis has been "jobless."

A fall in part-time work was a particular concern to retail workers.

"Every shop we speak with has workers who are seeking more hours, because their current hours do not provide enough income to live on," Reid said.