Key: Don't lose confidence despite jobless rise

John Key. Photo / Greg Bowker

Prime Minister John Key says New Zealanders shouldn't lose confidence in the job market despite an increase in the unemployment rate in the December quarter.

The unemployment rate rose to 6.8 per cent from 6.4 per cent in the three months to September, as the number of people in work fell and the number unemployed rose.

Today's figures, published by Statistics New Zealand (SNZ), showed a seasonally adjusted 2.18 million people were employed in the latest quarter, down 0.5 per cent from the previous quarter, although 1.3 per cent ahead of a year earlier when the unemployment rate was 7 per cent.

The household labour force survey also showed a seasonally adjusted number of unemployed at 158,000, up 5.1 per cent on the quarter while being 2.5 per cent lower than the year before.

Key said the household labour force survey number was notoriously volatile and reflects that the second half of 2010 was quite tough.

"What happened is that there was a lot of confidence in the early part of 2010, but once the financial crisis hit again with particularly the impact on Ireland and Greece, you started to see a position where confidence evaporated quite quickly," he told media after speaking to a Grey Power meeting in Papatoetoe, south Auckland.

"Again we come up to 2011 with confidence looking more perky again, and you've got to remember unemployment's a lagging indicator, not a leading indicator, so typically it tells you what has happened, not what's happening in the future.

"What we see is a lot more energy from the New Zealand corporate sector, we see them looking to employ more people, we're seeing an increasing number of jobs being advertised, we're seeing a reduction of people on the unemployment benefit from the high over Christmas. I think we shouldn't lose confidence."

Key said the advice he'd received from Treasury was that the unemployment rate had topped out at 7 per cent.

"We're part of a global environment so we can't control all of the factors that affect New Zealand, but all the indications we have is that 2011 will be a better year," he said.

"The Rugby World Cup is just one of a number of factors this year that represents a real opportunity for New Zealanders to be in to work and to prosper and it's important that we maximise that opportunity."

The Engineering, Printing and Manufacturing Union (EPMU) has reacted to this morning's unemployment figures by saying rising unemployment levels may now become the norm if the government continued "to do nothing to create jobs and protect Kiwi workers."

"The latest sharp increase in the unemployment figures signals that Kiwi workers are facing another difficult year," says EPMU national secretary Andrew Little.

"We've seen very little new hiring in the last two years and we know that it's not picking up on the ground despite the recession technically being over."

"The Government knows this and yet has done nothing to create new jobs or protect Kiwi workers during two years in power."

"If we don't see some serious new initiatives from the government very soon it's highly likely that this high level of unemployment will become structural and that would be a disaster for working Kiwis and for New Zealand's economy."

"If this level of unemployment is allowed to be locked in we will face another lost decade of growth as we did when National were in power in the 1990s."

The New Zealand dollar fell sharply on the data, from around US77.75c when the figures came out at 10.45am to US77.25c by 11.30am. The kiwi was also down from around A77.10c against the Australian dollar to A76.50c.

SNZ labour market statistics manager Peter Gardiner said the results from the past 12 months indicated the labour market had struggled to gain momentum following the recent economic downturn.

Despite the fall in employment in the December quarter, a fall in part time work and rise in full time work resulted in a 0.2 per cent rise in seasonally adjusted actual hours worked in the latest period from the September quarter. Annually, actual hours worked were up 2.9 per cent.

Part time employment fell a seasonally adjusted 2.8 per cent in the December quarter, while full time employment gained 0.3 per cent.

The male unemployment rate rose 0.8 percentage points to 6.5 per cent, while the female rate fell to 7 per cent from 7.2 per cent.

The labour force participation rate fell 0.4 percentage points to 67.9 per cent, the lowest level since March 2008, while the number of people not in the labour force rose 1.6 per cent in the latest quarter to 1.11m.

SNZ said the number of people aged 15 to 19 who were unemployed decreased significantly during the year to December, falling by an unadjusted 5900 or 13 per cent to 39,500.

For Maori, the unadjusted unemployment rate was marginally higher than a year earlier at 15.5 per cent, while for those identified as European/Maori there was a drop to 10.3 per cent from 13.6 per cent, and for those in the category of Middle Eastern/Latin American/African there was a drop to 6.3 per cent from 17.1 per cent.

European unemployment was unchanged at 4.6 per cent, for Pacific peoples it fell 0.5 percentage points to 13.5 per cent, and for Asians it edged up to 9.3 per cent.

NZPA / NZ HERALD ONLINE