Strong jobs growth sees unemployment drop, but only among men

Wednesday, 3 May 2017

Unemployment has dipped below 5 per cent - better than expected.

Unemployment has dropped back below 5 per cent, after the New Zealand economy added almost 10,000 jobs a month at the start of 2017.

For the time being at least, most of those jobs appear to be going to men.

Figures from Statistics New Zealand showed the number of people employed in New Zealand rose by 29,000 in the first three months of the year.

A booming construction sector saw the economy add 29,000 jobs in the first three months of the year, although a disproportionate amount were filled by men.

While the labour force also swelled on the back of record net migration, the overall change saw 6000 fewer people unemployed, with the unemployment rate dropping from 5.2 per cent to 4.9 per cent.

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* Lower than expected inflation has economists tipping another rate cut**

The fall was driven by a sharp fall in unemployment for men. Although the unemployment rate for men has tended to be lower than that of women, the gap is now the largest it has been in at least a decade.

Statistics New Zealand said the unemployment rate for men was now 4.2 per cent, down from 4.8 per cent at the end of 2016. It is the lowest unemployment rate among men since 2007.

For women the unemployment rate was unchanged at 5.7 per cent. Although the number of women employed grew by 10,000 during the three months to March 31, this was more than matched by the number of women entering the workforce.

As a result, the number of unemployed women actually grew by 2000 to 73,000.

To be counted in the figures, individuals most either be working or seeking work so, for example, a full time mother who is not actively seeking employment would not be included in the calculations of the workforce or unemployment.

Nick Tuffley, chief economist at ASB said it was possible the type of jobs being created were part of the cause of the sharp fall in male unemployment, with 17,000 new jobs in the construction sector.

'That will make up a fairly decent percentage of the overall jobs that are being created [and] that's going to be fairly male dominated.'

RECORD PARTICIPATION

Wednesday's figures also showed a fresh record in the participation rate - the proportion of the working age population which are either working or actively seeking work - to 70.6 per cent.

Although the number of women entering the workforce over the long term has seen the participation rate gradually climb, economists point to the so-called 'encouraged worker effect' tempts people to look for work because of a strong labour market.

Tuffley said ASB had believed the participation rate had been approaching the effective limit in recent quarters.

'But when you do have strong jobs growth that often does come with ongoing lists in participation because of people being hired back into seek work because the labour market's tightening up.'

Employment Minister Paul Goldsmith, said the figures showed the Government's economic plan was working 'with lower unemployment, strong job creation and higher wages'.

BUT LITTLE WAGE GROWTH

However despite the surprising lift in jobs, there has been little movement in wage growth, especially outside of the construction sector.

Along with the employment figures, Statistics New Zealand updated the labour cost index, which showed that private sector wages grew by just 1.5 per cent in the 12 months to March 31.

This compares to a rise in the consumer price index - the recognised measure of household inflation - of 2.2 per cent over the same 12 month period.

Labour finance spokesman Grant Robertson said this meant 'most Kiwis actually had a cut in real wages last year'.

CTU president Richard Wagstaff said the government needed to take action.

'[I]mprovements in economic conditions are not being shared with the very people who generate the improvements,' Wagstaff said.