New Zealand Jobless Rate Rises to 4.6%


New Zealand’s jobless rate rose to a five-year high in the fourth quarter as a prolonged recession prompted companies to cut production and fire workers.

The unemployment rate increased to 4.6 percent from 4.2 percent in the previous three months, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. The forecast matched the median estimate of 10 economists surveyed by Bloomberg News.

Rising unemployment will curb consumer spending and adds to signs New Zealand’s economy is unlikely to emerge from a recession until the second half of 2009. Reserve Bank Governor Alan Bollard has slashed interest rates and the government is lowering provisional tax payments to revive business confidence after it fell to a record low last year.

Telecom Corp., the largest telephone company, this week said it will shift 250 call-center jobs to Manila over the next 18 months to reduce costs. Air New Zealand Ltd., the largest airlines, is firing 200 workers including long-haul cabin crew as it reduces capacity on flights to Asia amid a slump in international travel.

New Zealand’s economy began contracting in the first quarter of last year and will probably remain in recession until June 30, Bollard said last week. The government reports fourth- quarter figures for gross domestic product on March 27.

A net 43 percent of companies expected trading would slow in the first three months of 2009, the most since records began in 1970, according to a New Zealand Institute of Economic Research Inc. survey published on Jan. 13. The net figure is calculated by subtracting those reporting an increase in activity from those seeing a drop.

The same survey showed a net 32 percent of companies expect to fire workers in the next year, the most since 1991.

The number of people unemployed rose to 105,000, the highest in more than six years.

Employment rose 0.9 percent, or about 21,000 jobs, in the fourth quarter, the statistics agency said. Economists expected employers would shed 15,000 jobs. Employment also gained 0.9 percent from a year earlier.

The number of people working or seeking work rose 31,000 to 2,296,000 and most of the additional people found jobs, the agency said. The number not looking for work or unavailable to work declined 19,000.

The participation rate, which measures the proportion of the population working or seeking employment, rose to a record 69.3 percent from 68.7 percent in the third quarter. Economists expected 68.4 percent.

The highest unemployment rate since December 2003, when it was also 4.6 percent, will ease pressure on wages and slow spending, justifying Bollard’s decision to cut borrowing costs.

Wages for non-government workers rose 3.2 percent last year, the slowest pace in 18 months, the statistics agency said Feb. 2.

Total actual hours worked declined 1.9 percent from the third quarter, adding to signs that output from the economy slowed, the agency said.

Full-time employment rose by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustments.

Part-time employment increased by 17,000 jobs, or 3.5 percent. Statistics New Zealand adjusts the full-time and part- time employment figures separately, which means they may not add to the total change in employment.

 


TradingEconomics.com, Bloomberg
2/4/2009 3:04:44 PM