Coronavirus: Unemployment rate jumps to 4.2 percent

New Zealand's unemployment rate jumped to 4.2 percent in the March 2020 quarter.

StatsNZ has revealed the seasonally adjusted unemployment rate rose 0.2 percent over the last quarter or 0.1 percent annually. It is now the highest it has been since the December 2018 quarter, when it sat at 4.3 percent.

"For men, the unemployment rate rose to 4.1 percent, up from 3.8 percent last quarter. For women, the unemployment rate remained at 4.3 percent," StatsNZ's latest information release says. 

"The seasonally adjusted number of unemployed people rose to 116,000 (up 5,000) in the March 2020 quarter. This reflected 5,000 more unemployed men."

The rate is expected to rise, however, with this quarter only capturing a small portion of the nationwide lockdown.

"Our surveys captured a robust labour market in the period before New Zealand went into COVID-19 lockdown. The unemployment rate has remained stable at around 4 percent since late 2018, after trending down since late 2012," labour market and household statistics senior manager Sean Broughton said.

"The impact of COVID-19 on the labour market, including unemployment, hours actually worked, and underemployment, should be clearer in the June 2020 quarter."

In the month to April 17, there were around 30,000 Jobseeker applications. Broughton stressed that while that is a sharp rise, it "is not the same as the offical measure of unemployment".

The lowest the unemployment rate has hit since the Global Financial Crisis (GFC) is 4 percent, which it reached most recently in the December 2019 quarter. The highest it got in this period was 6.7 percent in September 2012.

How high the rate may be pushed by the pandemic remains to be seen, but Treasury has previously said unemployment could be kept below 10 percent if the Government introduced appropriate financial support. The worst of the scenarios laid out by Treasury in mid-April suggested an unemployment between 17.5 percent and 26 percent if the lockdown was extended for a long period of time - something the Finance Minister said was unacceptable. 

The data released on Wednesday also showed that the seasonally adjusted employment rate had jumped 0.2 percent to 67.5 percent in the March quarter, while the seasonally adjusted underutilisation rate rose 0.4 percent to 10.4 percent.

There were 19,000 more people employed this quarter than last, with the average ordinary time hourly earnings rising to $33.14, up 1.2 percent quarterly or 3.6 percent annually. That is above inflation (2.5 percent).

"The numbers show that this Government's economic plan has been working, as businesses had the confidence to increase employment and invest in their workforces by raising wages," Finance Minister Grant Robertson said.

"Obviously much has changed in the last six weeks in New Zealand. While these numbers reflect the position New Zealand was in before the worst of COVID-19, they show we were in a strong position. The amazing work all New Zealanders have done through Level 4 and Level 3 to stay home and break the chain of transmission now means we’re well-placed to get a head start on our economic recovery."

He said the Government has made several investments in an attempt to try and cushion the blow of COVID-19. More than $10.6 billion has been paid out via the wage subsidy, while the Small Business Cashflow Scheme announced on Friday allows businesses the opportunity to receive interest-free loans of up to $100,000 depending on their size.

"We do know that this global 1-in-100 year health and economic crisis will contribute to unemployment rising further. The investments we’ve already put in place are designed to minimise these impacts, and support those who are out of work to find new employment," Robertson said.

StatsNZ also highlighted the labour force participation rate for people over the age of 70 has doubled over the last 10 years from 7.2 percent in March 2010 to 14.5 currently.

"COVID-19 is affecting how we are working, as well as who is working. With the older population considered more vulnerable to COVID-19, we are yet to see how much impact this crisis will have on older people in the labour force," Broughton said.

There are 392,000 people aged over 60 working, of which 73,200 are over 70.