New Zealand unemployment dives to 4.9%

New Zealand unemployment has confounded even the most bullish expectations, falling to just 4.9% in the December quarter, according to Statistics New Zealand. This compares to consensus forecasts of 5.6%:

Key facts

In the December 2020 quarter, compared with the September 2020 quarter:

  • Unemployment rate fell to 4.9 percent.
  • Underutilisation rate fell to 11.9 percent.
  • Employment rate rose to 66.8 percent.
  • Average ordinary time hourly earnings rose to $34.14.

In the year to the December 2020 quarter:

  • Wage rates increased 1.6 percent.
  • Filled jobs increased 0.9 percent.

The seasonally adjusted unemployment rate dropped to 4.9 percent in the December 2020 quarter, from 5.3 percent in the September 2020 quarter, Stats NZ said today.

Last quarter’s unemployment rate of 5.3 percent followed the largest increase observed in a single quarter since the series began in 1986.

Before the September 2020 quarter, the unemployment rate had been trending downwards from a peak rate of 6.7 percent in the September 2012 quarter. The December 2020 quarter’s rate of 4.9 percent is a return to rates observed over three years ago, when the unemployment rate was also 4.9 percent in the March 2017 quarter…

Employment up, but annual growth is modest

The seasonally adjusted number of employed people rose by 17,000 over the December 2020 quarter. This follows falls in the previous two quarters of the household labour force survey (HLFS), by 7,000 in the June 2020 quarter, and 19,000 in the September 2020 quarter…

All three aspects of underutilisation drop this quarter

In the December 2020 quarter, the seasonally adjusted underutilisation rate dropped to 11.9 percent, down from 13.2 percent last quarter.

“Like unemployment, underutilisation had been trending downwards prior to COVID-19. So, although we have seen a quarterly fall, the rate is still higher than this time last year, when it was 10.1 percent,” Ms Collett said…

Wages grow

In the year to the December 2020 quarter, average ordinary time hourly earnings as measured by the QES increased to $34.14 (up 4.2 percent) as gross pay rose more sharply than paid hours.

The labour cost index (LCI) salary and wage rates (including overtime) increased 1.6 percent in the year to the December 2020 quarter, while unadjusted LCI increased 2.5 percent.

That’s a remarkable turnaround.

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