Unemployment rises to near four-year high of 4.8%

Wednesday, 6 November 2024

The official unemployment rate is based on a survey by Stats NZ. To count, people must have actively looked for work in the previous four weeks.

Official unemployment rose to 4.8% in the three months to the end of September - a near four-year high of 4.8%.

The rise from from 4.6% in the June quarter was less than most most economists, including the Reserve Bank, had been expecting.

There was also a surprise fall in the labour underutilisation rate, which measures the proportion of people interviewed by Stats NZ who were seeking work or more hours but who for one reason or another did not count as officially unemployed.

That rate fell to 11.6%, from 11.8% in the June quarter.

However, Infometrics principal economist Brad Olsen said the update did not paint a rosy picture of the labour market.

A steep drop in the proportion of people counted as being in the labour force appears to have been mainly responsible for the surprises, rather than a much stronger-than-expected jobs market.

Unemployment is “broadening out” to new age groups, Infometrics principal economist Brad Olsen says.

The proportion of Kiwis in employment fell to 67.8%, down from 68.4% previously, while the labour force participation rate fell to 71.2%, from 71.7%.

That would suggest more people had given up looking for work and were not counted as officially unemployed because they were not actively seeking work when interviewed by Stats NZ.

Olsen noted that a net 14,000 fewer people were employed in the September quarter but only a net 5000 had been counted as officially unemployed.

He speculated that the large number of New Zealand citizens leaving the country for Australia and other destinations could be keeping the unemployment rate lower than it would otherwise be.

At least part of the exodus was likely to be driven by difficulties people were having finding work locally, he said.

The latest figures also showed unemployment was “broadening out” and becoming more prevalent among people aged 40 to 60, he said.

Labour finance spokesperson Barbara Edmonds said she was particularly concerned by an increase in the length of time people were out of work.

Stats NZ estimated 32,500 people had been unemployed for between six months and one year, an increase of 53% on the tally in the same quarter last year, she noted.

Labour finance spokesperson Barbara Edmonds is sounding alarm over the increase in the long-term unemployed.

The number of people who have been unemployed for more than a year rose 56% to 16,900.

Stats NZ estimated that 2.9 million people were employed in the September quarter.

“This was not a statistically significant change from the previous year, but it was a smaller proportion of the working-age population, which grew 75,000 annually,” it said.

“While net employment remained stable, there were changes in who was employed over the year as 45,700 more people who had been recently employed became jobless,” its labour market manager Deb Brunning said.

The labour market statistics are the last big piece of the economic jigsaw puzzle to land before the Reserve Bank is next scheduled to review the official cash rate on November 27.

Speculation is oscillating that it will choose between a 50 basis point and a 75bp rate cut, but Olsen believed the labour market figures would “rule out” the latter.

Westpac senior economist Michael Gordon said the labour market was still weak but agreed the figures would quieten talk of a 75bp rate cut, while keeping a 50bp cut in play.

Average hourly earnings, including for overtime, across the public and private sectors, rose 4% over the year to $42.06 an hour, pushed up by higher public-sector pay and overtime rates.

The rise in hourly earnings for private sector employees excluding overtime rates was 3.2%, slightly ahead of ANZ’s forecast of a 3% rise and still ahead of inflation, which was last measured at 2.2%.

In a separate finding, Stats NZ reported that almost exactly a third of the people it interviewed worked from home some or all of the time in the week before they were surveyed.

Finance Minister Nicola Willis has since led a drive to pull public service workers back into the office.

CORRECTION: An earlier version of this story incorrectly stated overall hourly earnings rose 5.2% to $49.75 an hour. Those were figures for public sector workers only (Amended 12.15pm, November 6, 2024).