17 Aug 2016

Unemployment drops after tweaks to labour survey

6:37 pm on 17 August 2016

Tweaks to how Statistics New Zealand counts people in the workforce have helped to edge unemployment figures down for the sixth quarter in a row.

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Unemployment dropped slightly from 5.2 percent to 5.1 percent in the three months to June. Photo: 123rf

The latest figures showed the number of people out of work fell to 131,000 (5.1 percent) in the three months to June 30, compared with 5.2 percent in the previous quarter.

It was the sixth successive quarter in which unemployment has fallen.

Employment rose 2.4 percent to 2.46 million people, but some of the extra 58,000 people in work was due to changes in the survey, Statistics New Zealand said.

That included reclassifying some people as not in the labour force to self-employed, and adding 10,000 defence force personnel who had previously been excluded.

Statistics NZ defended the changes, saying the revised survey presented a more accurate and complete picture of the New Zealand labour market.

ANZ senior economist Phil Borkin said the data needed to be treated with care, but the labour market was in good shape.

"The unemployment rate is trending lower, but there is still spare capacity there that's weighing on wage growth," he said.

"That's likely to be a gradual story that unwinds over the next few years as the economy still looks good."

Prime Minister John Key said the government's plan to expand the economy was working.

"The economy is growing pretty strongly, well over 300,000 jobs created since we've been in government, I think 251,000 in the last three years. The economy is in pretty good shape, wages are rising much faster than inflation, in real terms, quite strong wage growth."

But Labour's finance spokesperson, Grant Robertson, said the true jobless rate was closer to 13 percent if those wanting more hours was added in.

"We've got large levels of unemployment in New Zealand, and very low wage growth. And a lot of New Zealanders are saying 'where are the benefits from economic growth for me', and they are right to ask those questions."

The argument continued in parliament today, where MPs debated the numbers, although the focus was much more on the new way they were compiled, than the figures themselves.

"Are ANZ correct when they say today 'due to methodological changes, many of today's figures need to be taken with a grain of salt, particularly the surge in employment," said Mr Robertson

Finance Minister Bill English replied that ANZ had every right to have an opinion about the numbers, as did the government.

"However, they refrained from attacking the impartiality of the Government Statistician.

"If the numbers go up, it's because the numbers have gone up, not because the Government Statistician is manipulating the numbers as that member has claimed", said Mr English.

"And he [Grant Robertson] should know because he represents more public servants than anyone in the Parliament - it's a disgrace."

Mr Robertson said he'd been critical of the government, not of the statistician, and had his own question about how politicians use statistics.

"Does he consider it a disgrace that the Minister of Finance stood in this House and said that Statistics New Zealand's statement that inequality in New Zealand had grown under his watch was statistically invalid - is that a disgrace as well?"

Mr English admitted he could have been wrong.

"With respect to those conclusions, I passed on the advice I was given which I understand was legitimate statistical analysis, that the conclusions they'd drawn were not statistically valid.

"Since then I've had further advice that they probably were."

Mr Robertson questioned why Mr English had not corrected his statements to the House, if he now admitted his original comments were wrong.