Jobs growth, high participation rate show migrants finding work
New Zealand's rapid jobs growth and record participation in the first three months of the year show the country's high migration is getting mopped up by the local labour market and hasn't driven up wages.
Employment grew 0.9 percent in the quarter, ahead of economists' forecast of 0.6 percent, and was up 3.7 percent on the year, according to Statistics New Zealand. The participation rate rose 0.4 of a percentage point to 69.3 percent, the highest level since the series began in 1986, and ahead of the 68.8 percent forecast. (See table below)
Still, that didn't fuel higher wages, with the labour cost index, which measures wage inflation, rising at a quarterly pace of 0.4 percent across all sectors and including overtime for an annual lift of 1.6 percent. Private sector ordinary time wages rose at a quarterly pace of 0.3 percent, ahead of the 0.2 percent increase in public sector pay.
"The data shows unequivocally the economy's on fire," said Stephen Toplis, head of research at Bank of New Zealand in Wellington. "A substantial amount of migration is going straight into employment, which is spurring domestic growth, but at the same time alleviating pressures that might be on the labour market."
The country's net inbound migration was at an 11-year in March as fewer kiwis shift to Australia as the economic fortunes of the neighbouring nations turn to New Zealand's favour. Those growth prospects have also helped attract new migrants, with larger net inflows across Asian nations including China and India.
New Zealand's record participation rate meant jobs growth didn't reduce the unemployment rate, which was unchanged at 6 percent in the quarter, above the forecast 5.9 percent.
Employment growth in the quarter was led by gains in the agriculture, forestry and fishing sectors, with the number of jobs rising to 156,800 from 149,500 in the December period, while construction jobs were up to 196,100 from 185,000.
Unemployment in Auckland rose to 7.3 percent from 6.3 percent in the December period, with a fall in employment and an increase in joblessness. Canterbury's unemployment rate slipped 0.1 of a percentage point to 3.3 percent, with a pick-up in participation and an increase in jobs.
Prime Minister John Key yesterday announced policy to provide a $3,000 sweetener to unemployment beneficiaries who secure full-time work for more than 90 days if they relocate to the Canterbury region to help with the rebuild effort.
Under-employment fell, with 4.1 percent of part-time workers willing and able to take on more hours, from 5.3 percent in the December quarter.
The quarterly employment survey, also released today, showed ordinary time private sector wages rose 0.7 percent to $26.16 in the December quarter, and were up 2.9 percent on an annual basis. Public sector ordinary time wages rose 1.7 percent to $35.86 in the quarter, for a 1.8 percent annual increase.