ZB

Unemployment rate rises to 3.3%, defying expert predictions

Author
NZ Herald ,
Publish Date
Wed, 3 Aug 2022, 11:09am
Photo / File
Photo / File

Unemployment rate rises to 3.3%, defying expert predictions

Author
NZ Herald ,
Publish Date
Wed, 3 Aug 2022, 11:09am

The latest unemployment stats are in - and despite forecasts, the rate is up.

Economists had expected the jobs market to have tightened further in the second quarter.

And the rate was already at a record low for the modern era (post-1985) at 3.2 per cent.

The New Zealand dollar fell by 0.7 per cent to USZ$62.26c immediately after the release.

But this morning, the stats defied expectations to rise slightly to 3.3 per cent for the year to June 30.

The figures were still partly clouded by Omicron disruptions, but looking beyond quarterly volatility it was clear that the labour market still looked extremely tight, said ASB senior economist Mark Smith.

The rise in the unemployment rate partly reflected weak employment growth, which was flat in the second quarter, he said.

"While the unemployment rate bucked expectations with a slight increase, the other details point to an economy that is running up hard against capacity constraints, and the pressure on wage growth is intense," said Westpac chief economist Michael Gordon.

Meanwhile, wage inflation, measured by the labour cost index (LCI), was 3.4 per cent in the year ended June 2022. Average ordinary time hourly earnings rose 6.4 per cent, StatsNZ said today.

"The June quarter had the largest increase in LCI salary and wages rates since late 2008," StatsNZ business employment insights manager Sue Chapman said.

"Over the year, a steadily increasing number of wages have been raised to better match market rates, as well as attracting or retaining staff," she added.

"Nearly two-thirds of roles surveyed in the LCI saw an increase in ordinary time wage rates in the year ended June 2022, the highest level since this series began in 1993."

A relaxation in tight labour market conditions was still needed to cool inflation, said ASB's Smith.

"We expect the labour market to eventually loosen from next year as net immigration outflows turn into inflows, and the competition for jobs amongst workers in New Zealand. increases."

Annually, the number of people who were away from work for a full week due to sickness, illness, or injury nearly doubled up to 55,000.

The official unemployment rate is measured by StatsNZ's Household Labour Force Survey.

The seasonally-adjusted number of unemployed people reached 96,000, compared with 94,000 last quarter.

That compared to around 100,000 people currently on Jobseeker (work ready) benefits.

But there was a significant drop in the Māori unemployment rate.

Annually, the unemployment rate (not seasonally adjusted) for Māori fell to 5.5 per cent, from 7.8 per cent.