Unemployment drops to lowest rate since 2008

(iStock)
(iStock)

The unemployment rate has fallen to 4.9 percent for the September 2016 quarter, according to new figures from Statistics NZ.

That's the lowest it's been since December 2008.

ASB chief economist Nick Tuffley says that while the figures appear very strong, the results should be treated with caution.

"It appears there are still uncertainties over the impact that the extensive changes to the Household Labour Force Survey (HLFS) are having on the results," he says.

He says it's likely the Reserve Bank will cut the Official Cash Rate (OCR) next week - predicting a drop of 25 basis points to 1.75 percent.

"There are no indications in the labour market results that reinforce the need for further OCR cuts beyond next week, though the RBNZ will downplay the apparent strength of the employment/unemployment figures given ongoing question marks about their reliability," he says.

Senior Economist for Westpac Anne Boniface says the data reflects a market where it’s easier to find a job, but harder to employ.

“The participation rate’s risen [and] employment growth has been very strong,” she said.

“So people are either employed already and they’re to be attracted away from one job into another, or they need to be motivated to move into the labour force at all, and one way to do that is to pay them higher wages.”

Ms Boniface says the increase in workforce could come from a mix of locals being drawn into the workforce as much as strong migration.

The figures show employment grew by 35,000, or 1.4 percent, in the same quarter. There were 3,000 fewer unemployed people than in June, and 10,000 fewer over the past year.

Unemployment drops to lowest rate since 2008

Seasonally adjusted unemployment rate to September 2016 (Statistics New Zealand)

Mark Gordon from Statistics NZ says the growth in employment exceeded population growth over the latest quarter, with 66.7 percent of the working-age population now in some form of employment.

The working-age population grew by 24,000 people (0.7 percent) over the quarter to reach 3,739,000.

There was particularly high employment growth in the rental, hiring, and real estate services industry, primarily in the Auckland, Wellington and Manawatu-Wanganui regions.

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