5 Aug 2010

Unemployment rate rises more than expected

10:05 pm on 5 August 2010

Social Development and Employment Minister Paula Bennett says an increase in the unemployment rate reflects a bumpy ride out of the recession.

The official unemployment rate rose to 6.8% of the workforce at the end of June, up from 6% in the March quarter. The consensus forecast among economists had been a rise of 6.4%.

Statistics New Zealand says employment fell by 6000 during the quarter at the same time as 14,000 more people came into the workforce.

The effect of that was a rise of nearly 20,000 in the number officially unemployed - the biggest increase since the recession ended midway through last year.

Males accounted for most of the increase - 15,000 more of them were out of work. However, the number of hours worked increased in the quarter, suggesting that those in employment are working for longer.

Ms Bennett says the unemployment rate is higher than the Government would have wanted. But she says given that it fell from 7.1% in December to 6% in March, the 6.8% figure for the last quarter represents an evening-out of the figures.

However, the Labour Party says the figures show the economy is bouncing on the bottom of the trough. It says the Government has no plan for the economy and creating jobs and needs to come up with one.

Labour's finance spokesperson David Cunliffe says the unemployment figure is much higher than forecast by the Reserve Bank and the Treasury, and the Government needs to review its economic strategy because it is not working.

The New Zealand dollar fell half a cent to US73 cents after the unemployment figures were issued on Thursday evening was trading at US72.95c.

Economy in doldrums, say employers

The Northern Employers and Manufacturers Association says the economy is in the doldrums - and the jobs market with it.

Association chief executive Alasdair Thompson says the economy is muted.

"Over the last six months firms have been increasing the hours of work for their staff by and large. There was a big reduction in hours - that's recovered over the past six months.

"The hours now are fairly stable, they've improved a wee bit. I think it's what you'd call a muted economy - it's not getting worse, but it's not getting better fast either."

The Council of Trade Unions says a new point of urgency has been reached in the economy - the same urgency as at the start of the recession and the global financial crisis.

However, jobs website seek.co.nz says job advertisements are up 5% since the end of June.