The jobless rate dropped to 3.5 percent, seasonally adjusted, from 3.6 percent in the second quarter, Statistics New Zealand said in Wellington today. Companies unexpectedly shed 7,000 workers while overall 18,000 people left the labor market, shrinking the labor force and lowering the unemployment rate.
Reserve Bank Governor Alan Bollard last month cited a ``tight'' labor market as a source of inflation pressure and a reason for leaving the benchmark interest rate at a record 8.25 percent. The central bank has little scope to cut borrowing costs because consumers, assured of work, are upbeat and unlikely to rein in spending.
Employment fell 0.3 percent, or 7,000 jobs, from the second quarter, the statistics agency said. From a year earlier, employment gained 1.5 percent.
The participation rate, which measures the proportion of the population working or seeking employment, fell to 68.3 percent from 68.8 percent in the second quarter.
The number of people working or seeking work declined 9,000 to 2,229,000. The number of people not looking for work or unavailable to work surged by 18,000 as women moved out of the labor force, the agency said.
A shortage of workers may prompt companies to pay more and attempt to recover their costs by raising prices, adding to inflation. Wages for non-government workers rose a record 3.3 percent in the third quarter from a year earlier, according to a Nov. 5 report.