New Zealand jobless rate slumps to lowest in 8 years, wage growth remains subdued

New Zealand’s Unemployment has dropped to the lowest level in more than eight years, falling to 4.8 percent in the middle of the year. Despite a surprise fall in the number of people working in recent months, Statistics New Zealand said those classified as unemployed dropped by 3000 to 128,000 in the three months to June 30.

However, the participation rate fell 0.6 percentage points to 70.0 percent, which is down from an all-time high in Q1. It meant that even with solid working-age population growth (+0.5 percent q/q), the labour force contracted by 0.2 percent q/q. Despite lacklustre wage growth, total gross earnings are still running at a strong pace, lifting 1.5 percent q/q (5.1 percent y/y) in Q2. That should be enough to continue to support healthy spending growth in the economy.

Unemployment among women, which tends to be higher than for men, dropped sharply in the quarter, down from 5.7 percent to 4.9 percent, the lowest since March 2009. Although the number of females in employment rose by only 1000 in three months, there was a much larger fall in the number who were not considered to be in the labour force.

In the 12 months to June 30, the number of people employed in New Zealand rose by 76,200, an increase of 3.1 percent. During the June quarter, the number of people employed in New Zealand actually fell slightly. Overall unemployment dropped in both the North and South Islands, to 4.9 percent and 4 percent respectively, compared to a year earlier.

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