Jobs market weakness 'shocking'

JAMES WEIR
Last updated 05:00 08/02/2013

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The job market is "shockingly weak", according to some economists, with employment slumping 1 per cent or 23,000 in the December quarter as part-time employment crumbled.

It was the third quarterly fall in total employment and the biggest quarterly drop since early 2009. The fall in jobs hit women hardest - they accounted for 20,000 out of the 23,000 drop in official figures issued yesterday.

The New Zealand dollar initially fell half a US cent on the household labour force survey, ending the day at US83.59c, down from US84.18c the previous day.

The weak jobs report was seen as another sign that the Reserve Bank would be in no rush to raise the official cash rate, with inflation at extremely low levels.

The jobs market has effectively been stagnant for three years, with 11.5 per cent of the workforce wanting to work or work more hours in the past year.

ANZ Bank economists said that while they were sceptical about parts of the volatile jobs and unemployment report, the overall picture was a weak labour market.

"This confirms the Reserve Bank will not be raising the official cash rate for a while, despite a lively housing market and rising credit growth," ANZ said.

In yet another confusing quarterly report, the official unemployment rate improved much more than expected in the December quarter to 6.9 per cent per cent, with some 163,000 people out of work.

The unemployment rate was 7.3 per cent in the September quarter.

But the improvement was not driven by more jobs, but more people moving out of the workforce, either young people staying in school or older people retiring early, in their late 50s.

Deutsche Bank economist Darren Gibbs said at face value the quarterly figures showed a job market that was "shockingly weak" after a 6 per cent fall in part-time work.

The report showed a 50,000 fall in the self-employed in the past year, and a 6500 drop in farm workers.

The unemployment rate fell to 6.9 per cent only because of a big drop in the participation rate to the lowest levels in eight years. The participation rate was down to 67.2 per cent.

Bank of New Zealand head of research Stephen Toplis said the official figures just added confusion when the BNZ's economists were putting together "a major upgrade to our medium-term growth forecasts".

Business hiring intentions and reported jobs growth were poles apart. And the housing market was strong and that usually reflected the state of the job market, Toplis said.

WORK WOES

December quarter Unemployment : 6.9 per cent (7.3 per cent September quarter)

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Employment: down 1 per cent (23,000) (down 0.4 per cent in September quarter)

Participation rate: 67.2 per cent (68.4 per cent in September quarter)

Source: Statistics NZ

- BusinessDay.co.nz

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