Unemployment rate unchanged at 3.2 percent, annual wage inflation rises to 3 percent

New official figures show unemployment in New Zealand remains unchanged but wages have grown.

Wage inflation, the percentage change for all salary and wage rates, increased 3 percent year-on-year, according to official Stats NZ data released on Wednesday. 

"Wage inflation is at its highest level since the March 2009 quarter," said Stats NZ's business prices delivery manager Bryan Downes.

But it's not keeping up with the rising cost of living. Annual inflation was up 6.9 percent year-on-year, Stats NZ announced earlier this month

ASB Bank senior economist Mark Smith said wage growth is expected to keep rising  as workers seek compensation for the skyrocketing cost of living.

The unemployment rate is unchanged at 3.2 percent in the March 2022 quarter, remaining one of the lowest since records began in 1986. 

"This is a very positive result in what has been a challenging environment. It is a sign of confidence in the economy and the Government's strong health response and sound economic management," said Finance Minister Grant Robertson. 

"The results also show New Zealand has once again performed favourably against the countries we measure ourselves with New Zealand's unemployment rate the sixth equal lowest in the OECD.

"On comparable measures, New Zealand's 3.2 percent unemployment rate stands against 4 percent in Australia, 3.8 percent in the United Kingdom and the United States and 5.8 percent in Canada. The OECD average is 5.2 percent."

Economists expected it to drop below 3.2 percent due to the tight labour market. 

"We know just how tight the labour market is at the moment. Infometrics is expecting the unemployment rate to drop to 3.1 percent, but just about every forecaster I've seen is expecting it to go down," Infometrics principal economist Brad Olsen told AM on Wednesday.

Stats NZ also revealed that the number of employed people in the March quarter who gave sickness, illness, or injury as the main reason they were away from  work for a full week was up 67 percent compared with the same quarter last year.

Of the 2.8 million employed people in the March 2022 quarter, 44,200 were away from work for a full week because of sickness, illness, or injury, an increase of 17,700 people compared with the same time last year. 

"In the March 2022 quarter we've seen it increase by around two thirds annually as Omicron cases began to increase in the community," said Stats NZ work and wellbeing statistics senior manager Becky Collett.

Robertson said the economy has coped. 

"While hours worked fell as Omicron affected worker attendance through illness and self-isolation, businesses are continuing to hire despite the pandemic, ongoing supply chain disruptions and the Ukraine war.

"The investments made by the Government to keep businesses open and Kiwis in work has paid dividends. Projections of 10 percent unemployment were avoided because of the actions we've taken, and today's number highlight how successful our plan to keep and support New Zealanders into work has been. 

"The volatile environment is likely to see unemployment move around a bit, but we are heading in the right direction."