Employment figures bring a ray of hope

By BRIAN FALLOW

The unemployment rate has dropped to 5.9 per cent, the lowest for 12 years.

Job figures for the September quarter were better than expected.

The figures announced yesterday were not like those for the June quarter, when unemployment dropped to 6.1 per cent, but only because of people leaving the workforce.

This time they reflected 22,000 more people employed, an increase of 1.2 per cent, with 92 per cent of the new jobs full time.

But some economists have questioned the figures, noting that recent business surveys showed firms were planning to shed staff.

The figures came as global telecommunications company Ericsson announced plans to create another 150 high-tech jobs, though it expects to recruit some people from overseas.

Ericsson plans to develop its work on mobile internet services in a joint venture with the New Zealand software company Synergy International.

Ericsson's managing director Goran Olsson said yesterday that New Zealand was an interesting market that adapted to innovation quickly.

"The workforce and work ethic and competence is quite high."

But in the face of this good news, Oamaru's economy was dealt a blow with the closure of a sweet factory. Nestle New Zealand's confectionery factory will close next year, affecting 48 jobs.

The latest employment data shows jobs are spread across most sectors of the economy apart from construction, which is slowing after a growth spurt a year ago, and manufacturing, where employment is steady as falling local sales offset growing exports.

Auckland's unemployment rate dropped from 5.8 per cent in June to 5.1 per cent, and the Bay of Plenty's from 8.6 to 8.1 per cent. But the Waikato's went up, from 5.6 to 6 per cent.

Northland still had the highest unemployment rate, 8.7 per cent.

Its participation rate, which is the proportion of the working age population either employed or actively looking for work, was also one of the worst at 60.3 per cent.

Employment Minister Steve Maharey said the figures showed the need to improve job prospects for youth, Maori and Pacific Islanders.

The Maori unemployment rate at 14.2 per cent was more than three times the Pakeha rate. For Pacific Islanders the rate was 11.3 per cent.

National's unemployment spokesman Bob Simcock said: "The figures have reversed the negative trend of the first six months under Labour.

"But it will take a few more surveys to determine whether this is an improving trend or a statistical hiccup."

ANZ Bank chief economist Bernard Hodgetts said yesterday's figures were at odds with most other indicators of what was happening in the labour market.

The Institute of Economic Research's quarterly survey of business opinion had more firms reporting a fall than an increase in staff numbers over the September quarter, and expecting further cuts.

The National Bank's October business confidence survey found almost twice as many firms saying they would be shedding staff as hiring, over the coming year.

On the other hand, the number of job advertisements have been slowly rising for the past five months.

National Bank chief economist Brendan O'Donovan thinks some of the increase in employment is catch-up from the first half of the year, when employers held back from hiring until they saw the detail of the Employment Relations Act.

"It fits in with our general view that there is growth, but business is grumpy because it is not particularity profitable growth. Profits are being squeezed by higher costs."

John Pask, policy manager at the Employers Federation, said the figures were encouraging.

"But we need to see if the trend is sustained for another quarter or two before dancing in the street."

Council of Trade Unions economist Peter Conway said: "The figures show there is more confidence in the employer community than is perhaps revealed in some confidence surveys."

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