MNI ANALYSIS:New Zealand Labor Mkt Strong;Record Participation

--Jobless Rate Fall to Lowest Since December 2008

By Sophia Rodrigues

     SYDNEY (MNI)  - New Zealand's labor market was strong in the third quarter,

with a significant rise in the rate of employed, a record high participation

rate and a fall in the jobless rate to the lowest since the December 2008

quarter.

     The data show spare capacity in the labor market is slowly diminishing and

the Reserve Bank of New Zealand may soon find itself in a position similar to

some other major central banks, including the U.S. Federal Reserve, which are

witnessing increasing tighter domestic labor markets while inflation remains

relatively low.

     The data also showed a rise in wage inflation but much of it was due to a

recent wage settlement for workers in the healthcare sector. Without this

effect, inflationary pressures remain subdued.

     Data published by Statistics New Zealand Wednesday showed the jobless rate

fell to 4.6% in Q3 from 4.8% in Q2. Employment rose 2.2% q/q and the labor force

participation rate climbed to 71.1%, a new record high, from 70.1% in Q2. This

was due to 54,000 more people entering the labor force.

     The outcome beat the MNI survey median forecast, which predicted the

jobless rate would fall to 4.7%, the participation rate would rise to just 70.1%

and employment would grow just 0.8% q/q. The outcome also beat the RBNZ's

forecast that the jobless rate would fall to 4.7%.

     The greatest contributors to annual employment growth were: professional,

scientific, technical, administrative, and support services, which rose 34,400

(12.0%); construction, up 22,300 (9.9%); and public administration and safety,

up 12,500 (9.1%).

     Wage inflation rose 0.6% q/q and 1.9% y/y, with the annual rate the largest

since September 2012. A major cause of the rise was the Care and Support Workers

pay settlement, which came into effect on July 1.

     Without this effect, wage inflation would have increased just 1.6% y/y,

Statistics New Zealand said. In Q3 quarter, labor cost index wage rates for the

healthcare industry (private and public sectors) rose 2.2% compared to just a

0.4% rise in Q2. 

     The analytical unadjusted labor cost index rose 0.9% q/q and 3.4% y/y.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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