The unemployment rate increased to a six-year-high 5 percent, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures.
The participation rate, which measures the proportion of the population working or seeking employment, dropped to 68.4 percent from 69.1 percent in the fourth quarter.
The number of people working or seeking work fell 17,000 to 2,297,000 as people who lost jobs moved out of the labor force, the statistics agency said. The number not looking for work or unavailable to work increased 24,000 to 1,061,000.
Economists said the jobless rate will keep rising amid a slump in business confidence and hiring intentions, which is prompting companies to fire workers.
Employment fell 1.1 percent, or about 24,000 jobs, in the first quarter, the statistics agency said today. Economists expected employers would shed 22,000 jobs. The decline is the most since the second quarter of 1989.
Business confidence slumped to the lowest since 1974 in the first three months of this year, the New Zealand Institute of Economic Research Inc. said on April 7. A net 65 percent of firms expect the economy will worsen over the next six months.
The same survey showed a net 36 percent expect to fire workers in the next three months, the most since 1991. The net is calculated by subtracting the pessimists from optimists.
The rising unemployment rate will ease pressure on wages and slow spending, justifying Bollard’s decision to cut borrowing costs.
Wages for non-government workers rose 0.5 percent in the first quarter, the slowest pace in five years, the statistics agency said yesterday.
Total actual hours worked gained 0.2 percent from the fourth quarter, the agency said.
Full-time employment fell by 11,000 jobs, or 0.7 percent, in the first quarter after seasonal adjustments.
Part-time employment slumped by 16,000 jobs, or 3.1 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.