3 May 2023

Unemployment rate holds steady at 3.4% in March quarter

1:01 pm on 3 May 2023
Man trying to find work with online job search engine on tablet.

Photo: 123RF

The labour market remains strong with unemployment remaining close to record lows and wages rising at record pace.

Stats NZ reported unemployment unchanged at 3.4 percent, but with the growth in the number wanting work matched by the number of jobs available.

Private sector wages measured by the labour cost index rose a record 4.5 percent for the year ended March, while another measure using hourly pay rates beat inflation, rising 7.8 percent.

"Unemployment and underutilisation rates ... have been sitting at or near record lows for more than a year," Stats NZ senior manager Becky Collett said.

About 23,000 jobs were added in the March quarter, while the underutilisation rate, which measured those seeking a job or wanting to work more, fell to 9 percent in the previous quarter.

The participation rate, the proportion of working age people in the workforce, set a new record, as did the number of women in employment.

A notable feature was the growth in the number of women working, which hit a record high.

Westpac senior economist Michael Gordon said the data showed a still tight labour market, but one possibly close to peaking.

"The labour market is tight, albeit past its hottest point, and it isn't deteriorating in any meaningful way yet."

The labour market is usually one of the last parts of the economy to slow down.

Kiwibank chief economist Jarrod Kerr said high employment and wages were inflationary, and both would likely cool in the coming months.

He expected the rate of unemployment would rise until next year, in line with the Reserve Bank's efforts to cool inflation.

ANZ economists said the numbers should not unduly worry the Reserve Bank but would not stop another rate rise.

"Taken together with the weaker-than-expected Q1 CPI (inflation) print, starting point surprises at the upcoming May MPS [monetary policy statement] certainly aren't one-way traffic," the economists said in a note.

"We maintain our expectation for just one further 25 basis point official cash rate hike. Looking forward, we expect labour market pressures to ease over the rest of the year and into 2024 as labour demand continues to soften and labour supply via migration recovers."

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