Unemployment drops as 23,000 get work

The jobless rate in Auckland fell but was still higher than the national average. Photo / Doug Sherring

The number of people employed rose 1 per cent or 23,000 in the September quarter, enough to mop up an increase of 13,000 in the labour force and reduce the number of unemployed by 10,000 to 150,000.

It cut the unemployment rate to 6.4 per cent from a revised 6.9 per cent in June, bettering market expectations, which were clustered around 6.7 per cent.

The household labour force survey's seasonally adjusted unemployment rate has been volatile this year. However, the September number can be seen as a marginal improvement on the 6.45 per cent averaged over the March and June quarters.

The participation rate rose to 68.3 per cent, the highest since June last year. It is the proportion of the working age population (everyone over 15) who is either working, or actively seeking work, or has a job to start in the next four weeks.

A majority (13,000) of the 23,000 increase in employment was part-time and there was a rise in "under-employment" - the number of part-timers who would prefer to work more hours.

Almost all (21,000) of the increase in employment was among male workers, Statistics New Zealand said. Male unemployment fell by 15,000 while female unemployment rose 5000 to 7.2 per cent, the highest rate since 1998. The unemployment rate in the Auckland region fell to 7.4 per cent, unadjusted, from 8.7 per cent in June.

"Our seasonally adjusted estimates put the Auckland unemployment rate at 8.1 per cent, while the nationwide rate excluding Auckland is 5.7 per cent," Goldman Sachs economist Philip Borkin said.

"Therefore to see a meaningful improvement in the labour market statistics, much of it will have to come from the Auckland region.

"Given Auckland's exposure to consumer-related sectors and the current backdrop of a weak housing market and cautious consumer, this reinforces in our minds that the process will be gradual."

Hours worked increased 0.8 per cent, after strong growth over the first half of the year, and are up 3 per cent on a year ago.

"The continued growth in hours worked is a positive sign for future employment growth, as it tends to indicate firms are using up existing capacity as demand increases," ASB economist Jane Turner said. Wages data on Tuesday were also better than expected.

"Overall, the continued improvement in the labour market will start to feed through to stronger wage growth over the next year, and will underpin a recovery in consumer confidence," Turner said.

ANZ economist Mark Smith said that average hours worked per person was still well below its historical average, so considerable scope remained for firms to work existing staff longer rather than rushing to take on new staff.

Of the increase of 39,000 over the past year in the number of people employed, almost a third was in the primary sector - agriculture, forestry and fishing.

"Given strong activity in forestry and high commodity prices generally, this should not come as a surprise," Smith said.

Other labour market indicators have been improving, though less dramatically.

Last week's National Bank business sentiment survey found a net 8 per cent of firms expect to increase staff numbers over the year ahead and the Institute of Economic Research's quarterly survey of business opinion recorded a pick-up in hiring intentions.

JOBS DATA
* 6.4 per cent unemployment rate for September quarter, down from 6.9 per cent in June.
* 150,000 number of unemployed, down 10,000.
* 8.1 per cent seasonally adjusted unemployment rate for Auckland. Most of the increase was in part-time work, while under-employment rose