Jobless shock as rate hits 13-year high

New Zealand's unemployment rate unexpectedly rose to a 13-year high as the pool of jobs shrank for a second straight quarter, with a flat labour market in Auckland and fewer full-time staff.

The kiwi dollar tumbled about half a US cent.

The jobless rate rose half a percentage point to 7.3% in the September quarter, the highest level since June 1999, according to Statistics New Zealand's household labour force survey. Economists surveyed by Reuters were picking a 0.1 percentage point fall to 6.7%.

The number of people employed fell 0.4% to 2.22 million in its second quarterly decline, while the participation rate was unchanged at 68.4%.

"The unemployment rate has stayed between 6.4% and 6.8% over the past two years, and has now risen for the third quarter in a row," industry and labour statistics manager Diane Ramsay says in a statement.

The New Zealand dollar dropped to 81.93 US cents after the figures were released, from 82.56 cents immediately before.

New Zealand's labour market has been struggling to recover from the nation's deepest recession in two decades, with employers more keen on taking on part-timers and casual staff than hiring permanent full-timers.

Just today, Dynamic Solutions of Christchurch said it will shed 40-60 jobs as it winds down its contract manufacturing business.

Auckland's unemployment rate rose 1.3% points to 8.6%, with the number of people employed in the country's biggest city at 691,200, the fewest since June last year.

Full-time employment shrank 0.8% to 1.7 million, while part-timers rose 1.4% to 519,000.

The number of jobless people, which includes those who might not be actively seeking work, rose to 294,900 from 271,200, while underemployment, which counts people who are part-time but want to work more hours, was up to 113,300 from 109,500.

Workers in professional, scientific, technical, administrative and support services recorded the biggest decline in jobs, falling to 249,400 from 259,300 in the June quarter, while manufacturing shed 6100 jobs to 240,400. The number of people working in construction fell to 166,600 from 171,300.

Total hours worked shrank 0.8% to a seasonally adjusted 73.18 million and were down 2% from a year earlier.

Youths aged 15 to 24 not in employment, education or training (NEET), a target demographic for the government, rose to 13.4% from 13.1% in the June quarter.

Canterbury's labour market continued to improve, with the unemployment rate down 5.2%, from 6.5% in the June quarter. Waikato and the Tasman, Nelson, Marlborough, West Coast regions were the only other areas to show a lower jobless rate.

Northland recorded the highest unemployment rate at 10%.

Today's figures come after the quarterly employment survey showed total filled jobs rose 0.3% to a seasonally adjusted 1.715 million, bolstered by a pick-up in part-time workers and a decline in full-time equivalents to 1.35 million.

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35 Comments & Questions

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What a shocker!!
We'll be matching the US in no time
Glad to be shorting the NZD.

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Catalyst for a residential housing market crash?
Hopefully.

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So there is increased unemployment and trend to underemploymnet at the same time as residential property value increases are taking place. Would that not suggest investment dollars, even borrowed, are not going into the productive sector because of preference for favoured taxation vehicles such as residential investment property? Why would I invest in a nzx listed company that may grow and create jobs when the taxation bias is towards a house? Ever tried to borrow money to invest in a nzx listed company? I say this before someone suggests both are free of tax, except on income, and are equally viable.options for investment to create job growth. .

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There is ample reason to invest in shares over residential property. I know lots of property investors, and those who have stuck with residential, work for years at a job refore building up suffiecient income fro their investments vto live oof them. It's a tough way to make a living, but better than nothing as a sideline. Shares on the other hand are easy to investin or even too trade in without leaving your computer, and many give higher returns than residential property from day one; particularly some of the PIES - now that's where there is a tax advantage.

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but you try and borrow using the shares as security and see how far you get!

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Unemployment will only get worse under this government's policies.
There is too many tax incentives now for investors to pour money into existing rental housing rather than other forms of investments which create jobs. A reason why companies are being sold to overseas interests.
The Government should be training young people for building trades and provide some sort of a subsidy for first home buyers who wish to buy a new house.
This would provide thousands of jobs, directly or indirectly.
For the Government, it is a case of self interest

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There is absolutely no tax incentive to invest in real estate, that doesn't apply to any other form of investment ot taxcable activity. You are suffering from a widely held misconception. In fact there is less incentive since English disallowed depreciation.

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there is a huge tax incentive. You can borrow against the security of house and deduct against other income. Try borrowing using shares as security and note the interest rate!

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Since when does the IRD set the Banks interest rates... the fact is interest rates are tax deductable and capital gains are tax free on both property and shares when held in the correct entity. The fact Banks provide funding at a less of a rate against property has absolutely nothing to do with tax incentives... its RBNZ governance and liquity rating that affect that.

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As we become more automated to compete with international market and high dollar unemployment will only go one way!!!!

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Japan, norway, switzerland...It does not have to be that way with strong currency

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Well that sorted out the high nzd argument to some extent

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this is quite distressing mainly due to the now quite evident realisation amongst us all one would think that the steady as she goes policies really are not working and that courage is now required from wellington and perhaps a little humility to admit "we have been wrong" and are now "determined to change course and get it right" Doing a little here and a little there is quite apparently not enough!

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Agree but Which politician has that courage, the courage to admit that free market - free trade - a free float dollar (ha ha) is decimating the NZ productive industries?

exporting manufacturing jobs, crippling the farming sector that's where it's at,

The only thing that this Govt is concerned about is the price of housing in Auckland

So crank the interest rates up - put more people out of work - less people will be able to afford houses - price of houses should fall

That seems to be the policy strategy of this Jonkey Govt.

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Only 2.22 million working ... what are the other 2.22 million doing?

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@ #8 they are going to school or are in retirement homes. Not every citizen has to be gainfully employed. If you think the benefit situation is bonkers, take a closer look at projections around financing the greying population. Demographics are scary

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They are being supported by the tax of the 2.2 who are working of course

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Aren't you clever...

Kids, retired, stay at home mums etc. Not to mention the obvious, people on benefits

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They're on the bludge. The NZ disease.

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a brighter future, yeah right

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Not a big surprise given the falling tax take.

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why would skey be surprised by the data? most of the submissions predicted (warned) of serious fiscal harm and economic impacts, particularly referring to manufacturing slow down and small business failure, should his National government implement Labour policy, in what he described as a hoax, the ETS.

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So we have high unemployment AND a skills shortage.. Please explain Mr Key - dont let the door hit your ass on the way out either

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Shock?
Not to anyone who has kept eyes/ears open on the manufacturing front.
The last quarter of this year will - I reckon - be markedly down on the same quarter last year.. not to mention the flow-on affect in other sectors..

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High unemployment, high rentals, high cost of living. Where do we go from here?

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Where to from here did you say? Australia's usually a good option. Although I prefer the US.

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Time to leave. The last one out , please turn out the lights.

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I have more belief in the tooth fairy than the household labour force survey.It is unreliable and only used because it is cheap and used by other countries. A more accurate measure is the number of people receiving the multitude of benefits from WINZ. Our true unemployment is very high by world standards we just disguise the fact with payouts such as "sickness benefits".

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Hey John Key, still waiting on those 170,000 new jobs you promised!

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Yeah right cobber, there in Auzzie mate, she'll be right!!

haven't you figured Jonkey never quite tells the full story!!

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How very easy it is to bang on about beneficiaries. Some people are on a benefit for genuine reasons (e.g. mental or physical health issues). Surely the real issue is the fact that NZ has a high unemployment rate and yet also has a massive skills shortage. That alone would point to some pretty fundamental systematic failings. NZ and its people don't value education, we need a second chance education system that gives people vocational and life skills to contribute to society.

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The people on genuine benefit are not the problem. Its the election bribes of Working for Families, Interest free student loans and the massive generosity of universal superannuation thats the problem. These areas have put a total of over 1.5 million of our adult population onto transfer payments.

Adult education in NZ is brilliant.I went through our polytech and university in my 40s. Its never too late.

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Very concerning that neither the prime minister nor the finance minister were aware of the way this key statistic was trending particularly that this figure does not include the closures announced today.
Who is minding the store?
And this puts Govt even further behind from it's promised 170,000 new jobs!
liberte

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Time to really slash labour laws and taxes ... and put the pedal full down. 10% flat tax, first $30k unreportable ... let the unofficial economy work its magic on the unemployment numbers.

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The economy is still in the gutter... John Key, please do something to improve the economy!!

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