The pace of hiring in recent months has seemingly slowed, given the catch-up from pandemic-related worker shortages. Photo / Getty Images
The pace of hiring in recent months has seemingly slowed, given the catch-up from pandemic-related worker shortages. Photo / Getty Images
The official unemployment rate rose to 3.9 per cent in the year to September 30, from 3.6 per cent previously.
The new figure released this morning came as high interest rates put the squeeze on the economy.
The employment rate fell to 69.1 per cent from a high of 69.8 per cent last quarter.
But that rate is still high – the fifth highest rate since the Household Labour Force Survey began in 1986.
“Increases in unemployment and under-utilisation over the year indicate increasing spare capacity in the labour market following competitive labour market conditions in 2021 and 2022,” Stats NZ work and well-being senior manager Victoria Treliving said.
The New Zealand dollar and wholesale interest rates fell on the back of the data, which was seen as backing the case for the Reserve Bank for to leave its official cash rate at 5.5 per cent.
The Kiwi dollar dropped by about a quarter of a US cent in reaction to the data before recovering a little ground, trading by late morning at US58.06c.
On the Aussie dollar cross rate, the currency fell to A91.64c from A92.20c before the release.
Key two-year swap rates, which can have an influence on home mortgages, fell by six basis points to 5.54 per cent.
“The data was unambiguously softer than expected across the board, when you dive into the detail,” he said.
“It certainly enhances the idea that the Reserve Bank will be on hold at least the end of this month, which the market had priced in anyway,” he said.
The Reserve Bank’s monetary policy statement is due on November 29.
“There is a lot of water to go under the bridge until next February’s meeting, but there is a feeling that the chances of a rate hike then have been reduced as well,” he said.
Speizer said the data highlighted a role reversal between the Reserve Bank of Australia (RBA), which is expected to raise its rate next Tuesday, and the RBNZ, which looks to be on hold.
A year ago, the RBNZ was hiking rates while the RBA was on hold.
For men, the unemployment rate was 3.8 percent, compared with 3.4 percent last quarter.
And for women, the unemployment rate was 4.1 percent, compared with 3.9 percent last quarter.
A consensus of bank economists had forecast Stats NZ figures to show the official unemployment rate tick up.
Expectations were for the figure to land at 3.7-3.9 per cent, still low by historic standards.
In the September 2023 quarter, the seasonally adjusted working-age population increased by 31,000 people to reach 4.2 million.
Most of the quarterly growth came from an increase in the number of people not in the labour force, up 29,000.Average weekly earnings including overtime for full-time equivalent employees in the QES also increased on an annual basis, up 5.5 per cent to $1,558.
Annually, the seasonally adjusted working-age population grew by 2.6 percent in the September 2023 quarter, the highest annual rate change since early 2017.
In the latest quarter, average ordinary time hourly earnings, measured by the quarterly survey of employment (QES) increased to $40.40.
Wage growth measured by the Labour Cost Index (LCI) and including overtime increased 4.3 per cent in the year to the September 30, while the unadjusted LCI increased 5.8 per cent.
The pace of hiring over the quarter likely slowed given the catch-up from post-Covid worker shortages seemed to have run its course, ASB senior economist Mark Smith said.
“At the same time, firms are still reluctant to hire given the economic outlook and election-related uncertainties.”
In the September 2023 quarter, the seasonally-adjusted proportion of people aged 15 to 24 who were not in employment, education, or training was 12.1 per cent.
That compared to 11.9 per cent last quarter.
87.9 per cent of young people were in employment, education, or training. Photo / Andrew Bonallack
The rate for young men was 11.8 per cent, compared with 11.4 per cent from the previous quarter. For young women, it was 12.4 per cent, unchanged from the previous quarter.
The underutilisation rate was 10.4 per cent in the latest quarter.
That compared with 9.9 per cent from the previous quarter, and 8.9 per cent from the previous year.
Underutilisation is a broader measure of spare labour market capacity than unemployment alone.
The higher cost of living and record numbers of work-ready immigrants had been expected to show labour force growth outstripping that of employment.
“As a result, the unemployment rate is expected to hit its highest level since mid-2021 and is on track to approach 5 per cent by the end of next year,” Smith said.
Meanwhile, it was likely that labour cost growth had peaked on an annual basis. It was expected to cool over time given increased competition for jobs and easing labour market frictions, he said.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
