Jobless rate tipped to drop below 5pc

By BRIAN FALLOW economics editor

Job advertisements increased 0.3 per cent last month, continuing the rising trend this year.

Statistics New Zealand's household labour force survey shows employment grew at a strong 3.5 per cent over the year ended March. The unemployment rate is 5.3 per cent.

"At close to 30,000 a month, job ads are running at levels consistent with further employment gains," said ANZ Bank chief economist David Drage. "As a consequence, we could see a sub-5 per cent unemployment rate this year for the first time since March 1988, depending on immigration and the labour force participation rate."

The participation rate, which is at historic highs, is the proportion of the working-age population who are employed or actively seeking work.

Auckland job ads, which had fallen 2.1 per cent in May, fell another 0.2 per cent last month.

But Drage said even with those falls the trend this year had been upward, following a period of sharp decline in the second half of last year.

Nationwide, job advertising peaked in July last year at levels around 9 per cent higher than now.

Drage said a fall in advertising over the second half of last year was largely explained by migration inflows, which eased pressure on a tight labour market and reduced the need for readvertising.

The strength of net immigration meant that surprisingly strong jobs growth in the December and March quarters was matched by an increase in labour supply, he said.

Statistics New Zealand reports a net gain of 20,372 permanent and long-term migrants of working age (15 years and older) in the year ended March, a turnaround from net outflows over the previous two years.

Over the last three years, the net inflow of working-age migrants was a scant 1856.

Statistics New Zealand estimates that the ageing population will see labour force growth fall sharply to the point that the workforce will be shrinking in absolute terms by 2021.