New Zealand Jobless Rate Down to 4.8% as Participation Falls

-- Employed Growth Down 0.2% q/q

     WELLINGTON (MNI) - Household Labor-Force Survey data for the second quarter

published by Statistics New Zealand on Wednesday:

                                            Q2    Q1

----------------------------------------------------

                                           (%)   (%)

Unemployment Rate                          4.8   4.9

MNI Consensus           4.8 (Range 4.7 to 5.1)

Employed Q/Q                              -0.2  +1.2

MNI Consensus         +0.8(Range +0.7 to +0.9)

Participation Rate                        70.0  70.6

MNI Consensus        70.7 (Range 70.6 to 70.7)

     FACTORS: New Zealand's unemployment rate in the second quarter fell to its

lowest since the December 2008 quarter owing to a drop in the participation rate

which offset a fall in employed people. This was the first quarter since

September 2015 when employment growth was below population growth -- which rose

0.5% q/q. The participation rate fell to its lowest since the second quarter of

last year. The fall in the jobless rate came mainly from 10,000 fewer unemployed

women -- which pushed the female unemployment rate to 4.9% or its lowest since

the March 2009 quarter. Male unemployment rose 0.5 points to 4.7%.

     The labor underutilization rate fell 0.5 points to 11.8% -- representing

13,000 fewer underutilized people. The labor-cost index rose 0.4% q/q and 1.7%

y/y as a result of a 1.9% rise in public-sector wages and a 1.6% rise in

private-sector wages. For the fourth consecutive quarter private-sector wage

inflation was lower than that of the public sector.

     TAKEAWAY: The jobless rate of 4.8% matched a MNI median forecast but the

outcome was thanks to a fall in the labor-participation rate rather than a rise

in employed. The details of the survey were, therefore, less positive. From a

Reserve Bank of New Zealand monetary policy point of view the most important

data was the labor-cost index which rose just 1.7% q/q and was mostly a result

of a rise in public-sector wages. The data are supportive of the RBNZ leaving

the official cash rate on hold for longer - with some risk to the downside.

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

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