NZ jobless rate falls to 5.1% as statistician adopts new methodology; kiwi gains

New Zealand's unemployment rate fell more than expected in the second quarter as Statistics New Zealand adopted a new way of measuring the labour market to bring the country in line with international practices, and while a growing economy continued to support jobs growth. The kiwi dollar jumped above 73USc after the release.

The jobless rate declined to a seasonally adjusted 5.1% or 131,000 people, in the June quarter from a revised 5.2% rate in March, the government department said in a statement. Economists polled by Reuters predicted a rate of 5.3%, though the new methodology means comparisons with earlier periods aren't easy to make. The participation rate of 69.7% was up from 68.8% in March.

Statistics NZ redeveloped the Household Labour Force Survey – its benchmark labour market series – to better identify self-employed people, improve questions about undertaking paid work, and include members of the armed forces. At the same time, a strong economy has meant the labour market has been improving, and the government department expects to get a better sense of the nation's employment picture in the next two or three quarters. The kiwi dollar climbed as high as 73.22USc after the data was released, and was recently at 72.91USc from 72.82USc immediately before.

"The redeveloped survey presents a more accurate and complete picture of the New Zealand labour market," labour and income statistics manager Mark Gordon said. "The latest estimates are more in line with the current state of the labour market. However, comparisons with previous estimates will not always be straightforward and should be made with caution."

Statistics NZ delayed the release of today's data for a fortnight to ensure it met quality assurance standards after the modification. Employment data is often volatile, and a reported drop in the December unemployment rate raised economists' eyebrows when the jobless rate went in the opposite direction to participation.

Today's figures show employment rose 2.4% to 2.46 million people in the quarter, for an annual increase of 4.5%, though that yearly figure was partly due to the changes in methodology. The working-age population rose 0.9% to 3.72 million people in the quarter and was 2.7% higher in the year as the country goes through a period of record inbound net migration.

Statistics NZ introduced a new under-utilisation measure in the survey to provide a measure of the potential labour supply, including workers who may want more hours, those who want a job but aren't actively looking or available to take a job, as well as officially unemployed people. The underutilisation rate was 12.7%, with 106,300 employed people wanting to take on more hours, and another 109,500 who aren't officially unemployed but are either potential or unavailable job seekers.

The figures showed total hours worked rose a seasonally adjusted 2.5% in the quarter to 82.9 million hours in an average week. The 5.7% annual gain in hours worked was also influenced by the new methodology.

(BusinessDesk)