Unemployment climbs from nine-year low, sparking fresh political debate over the economy

Wednesday, 1 August 2018

Unemployment climbed slightly in the run up to winter, despite the economy continuing to add thousands of jobs a month.

Statistics New Zealand said on Wednesday that unemployment was 4.5 per cent at the end of June, up from 4.4 per cent at the end of March.

Amid a number of surveys showing business confidence is plunging, opposition politicians quickly blamed the figures on the Government.

The New Zealand economy continues to add thousands of jobs a month.

National finance spokeswoman Amy Adams blamed a 4000 increase in the number of unemployed people on 'anti-growth policies' of the Labour-led Government.

'While unemployment remains low, it shouldn't be increasing at all when there are such large capacity constraints in the labour maker and businesses have previously been crying out for new workers. The only explanation is poor Government policies.

Act MP David Seymour said Jacinda Ardern would return as prime minister on Thursday to find a 'flagging economy.

'All signs point to an economy which is about to stall, with business confidence in free fall and unemployment now ticking up.'

ASB chief economist Nick Tuffley said the labour market was 'solid' and the figures were so close to forecasts that any change was within the margin of error.

'We've had a huge increase in employment over quite a number of years, 3.7 per cent [employment growth] over the last year, is really strong, and that's despite really strong immigration and participation that's just shy of a recent record,' Tuffley said, with the strong job market encouraging people to look for work.

'You've got an awful lot more people available for work.'

Employment Minister Willie Jackson said the figures showed jobs were still being created and wages were rising.

'People's wages are rising. We have the highest rate of employment ever among Maori and Women and New Zealand has one of the highest rates of employment in the world,' Jackson said.

Unemployment has been falling steadily in New Zealand, from 5.3 per cent at the end of 2016 and 4.8 per cent a year ago.

Job creation has consistently outpaced a growing workforce, despite population gains boosted by near record gains from migration.

The economy continues to grow employment, adding an estimated 13,000 jobs in the June quarter and 94,000 in 12 months.

However the workforce grew faster than job gains in the June quarter, meaning the number of people unemployed rose by 4000 to 124,000.

Wednesday's release was largely in line with what economists had expected, with most tipping unemployment to remain steady at 4.4 per cent.

The household labour force survey also showed early signs of Government policy boosting pay rates, with the labour cost index for private sector workers rising 2.1 per cent in the 12 months to June 30, the first time it has topped 2 per cent in six years.

On April 1, the minimum wage rose by 75 cents to $16.50, the first in a series of hikes aimed to take the minimum wage to $20 an hour by 2021.

Statistics New Zealand said that excluding the hike in the minimum wage, private sector wages would have climbed by 1.9 per cent.

Unemployment among women actually dropped slightly, from 4.9 per cent to 4.7 per cent, while among men unemployment rose 0.3 percentage points to 4.3 per cent.

In most regions unemployment is falling. Southland has the lowest unemployment in New Zealand at 3 per cent, down from 4.6 per cent a year ago.

Manawatu-Whanganui unemployment is the highest in the country, up 1,9 percentage points in a year to 6.6 per cent.