NZ unemployment jumps to 4.3% as job creation slows

Thursday, 7 February 2019

Unemployment climbed at the end of 2018, up from the decade-long low reached in September.

Unemployment jumped at the end of 2018, as the number of new jobs being created slowed.

Statistics NZ said on Thursday that unemployment climbed to 4.3 per cent in December, up from a revised 4 per cent in September.

When the September figures were originally announced, the department had estimated unemployment had dropped to 3.9 per cent, the lowest level in a decade, news celebrated by the Government.

The New Zealand dollar dropped on the latest figures, as the market bets on whether the figures make an interest rate cut from the Reserve Bank more likely.

Most of the climb in the number of unemployed - which rose by 10,000 to 120,000 - was due to unemployed men. The number of men unemployed rose by 8000 to 65,000, while the number of unemployed women rose by 2000 to 55,000.

For the first time since 2010, men (4.4 per cent) are now more likely to be unemployed than women (4.2 per cent), Statistics NZ said.

'Softer than expected'

Economists had expected a small increase in the unemployment rate, after a sharp drop in September, but not to the degree the household labour force survey revealed.

ANZ, which had forecast that the unemployment rate would climb to 4.1 per cent, said the overall picture was softer than expected.

'It looks like the best that the labour market has to offer is behind us,' ANZ senior economist Liz Kendall said.

Westpac senior economist Michael Gordon said the figures showed the labour market may have grown more modestly than previously thought during 2018.

'Employment has grown only slightly faster than the working-age population, and the unemployment rate is only 0.2 percentage points lower than a year ago.'

Political debate

Thursday's figures are likely to restart debate about the state of the New Zealand economy.

When Statistics NZ announced in November that it estimated unemployment had fallen to the lowest level in a decade, the news was celebrated by Prime Minister Jacinda Ardern, who described the figures as 'incredible'.

On Thursday, Employment Minister Willie Jackson released a statement describing the unemployment rate as 'the second lowest in nearly a decade', focusing on lower unemployment for women and Māori since the coalition Government took office.

'The results released are in keeping with our expectations for this quarter and we are confident that in this strong economy, if we continue to listen to employers and work with industry, many people looking for work will find more opportunities to do so.'

National's finance spokeswoman Amy Adams said the figures suggest the economy may be slowing and the Government should take it as a 'reality check', with the number unemployed climbing, while those not in employment, education or training (so-called NEETs) rising by 26,000.

'If this trend continues, it is a bad look for a Government that claims to be doing more to 'get the nephs off the couch' and suggests it is failing to deliver on key promises,' Adams said in a statement.

'The unemployment rate is still relatively low, however we have now slipped from having the 9th to the 14th lowest unemployment rate in the OECD. At the same time, jobs growth has stalled and the underutilisation rate has increased.

'These weaker labour market numbers follow the third quarter's slower GDP growth and point to a change of direction for the New Zealand economy.

Trending lower

The unemployment rate still remains below where it was in mid-2018 and has been generally drifting lower for more than six years.

According to the figures, the number of people employed rose by 2,000 in the three months to December 31, the weakest quarterly increase since mid-2017.

However the underutilisation rate - a measure of both those who are unemployed and underemployed (meaning they would like to work more than they currently are) - climbed to 12.1 per cent, the highest since the end of 2017.

As new potential workers entered the workforce, the employment rate dropped to 67.8 per cent.