6 Aug 2019

Unemployment figures at lowest point since 2008

1:17 pm on 6 August 2019

The number of people out of work has unexpectedly fallen to its lowest level in more than a decade as more jobs were created, sending the the New Zealand dollar sharply higher.

Job search

The unemployment rate fell to a seasonally adjusted 3.9 percent in the three months ended June. Photo: 123 RF

Official figures show the unemployment rate fell to a seasonally adjusted 3.9 percent in the three months ended June from 4.2 percent in the previous quarter. It was the lowest jobless rate since mid-2008.

The bounce back in the labour market was much stronger than expected, with the economy creating 21,000 jobs during the quarter after the previous quarter's loss.

"Since late 2012, the seasonally adjusted unemployment rate has largely been tracking down, towards levels seen before the global financial crisis in 2008," Stats NZ senior manager Sean Broughton said.

The underutilisation rate, which measures the number of people working who are seeking more hours and is an indicator of slack in the market, fell to 11 percent.

Wage growth perked up with an annual growth rate of 2.2 percent, largely reflecting the increase in the minimum wage.

Unemployment figures graphic for second quarter of 2019.

Photo: Supplied / Stats NZ

ASB chief economist Nick Tuffley said the labour market had tightened, but he was cautious because all the signs have been pointing to a slower economy.

"More timely indicators suggest the worm has turned for the labour market. The broader economic slowdown now looks entrenched, and will likely translate into additional labour market slack ahead."

He said the numbers would not prevent the Reserve Bank of New Zealand (RBNZ) cutting its benchmark cash rate tomorrow and probably again in November.

The New Zealand dollar jumped nearly half a cent against the US dollar as investors picked the RBNZ might not have to be so aggressive in cutting interest rates.

Meanwhile, the ANZ Bank said the escalation of the trade dispute between the US and China now backed the the RBNZ cutting rates three more times this year.

China has let its currency fall in value, which makes its exports cheaper, in a move seen as retaliation for the latest increase US tariffs on Chinese imports.

Get the RNZ app

for ad-free news and current affairs