NZ Unemployment Rises to Five-Year-High

New Zealand's jobless rate rose to the highest in almost five years in the third quarter, adding to signs of a prolonged recession that is prompting companies to cut production and fire workers., 11/5/2008 3:44:57 PM

The unemployment rate increased to 4.2 percent from 3.9 percent in the previous three months, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures.

Rising unemployment will curb consumer spending and adds to signs New Zealand will post its worst gross domestic product result in 10 years. Reserve Bank Governor Alan Bollard has lowered the benchmark interest rate by 1.75 percentage points since July and will probably cut by at least another half point in December to bolster confidence and demand, economists say.

New Zealand's economy contracted in the first two quarters of the year and probably shrank in the three months to September, according to central bank and Treasury forecasts. Bollard last month said full-year growth will be slower than the 0.6 percent pace he forecast in September. The economy grew 3.2 percent in 2007.

Employment rose 0.1 percent, or about 3,000 jobs, in the third quarter, the statistics agency said. Economists expected employers would shed 13,000 jobs. Employment increased 1 percent from a year earlier.

Business confidence has slumped amid global financial market turmoil that has slowed the world economy. In October, confidence had its largest reversal on record, ANZ National Bank Ltd. said last week. The same survey showed 30 percent of companies plan to fire workers in the next year.

Fletcher Building Ltd., the nation's biggest building materials company, has fired 600 of its 9,000 workers in the past three months as home construction slows.

Carter Holt Harvey Ltd. last month announced the loss of 316 jobs at two sawmills as it cuts costs because demand for lumber is slowing.

ANZ National said in September it is reviewing staffing levels at its branches amid a decline in teller transactions. The nation's largest bank is also freezing recruitment and reducing the use of casual workers, it said.

The number of people working or seeking work rose 8,000 to 2,266,000 and most of the additional people didn't find jobs, the agency said. The number not looking for work or unavailable to work increased 1,000.

The participation rate, which measures the proportion of the population working or seeking employment, rose to a record 68.7 percent from 68.6 percent in the second quarter.

The highest unemployment rate since December 2003, when it was 4.6 percent, will ease pressure on wages and slow spending, justifying Bollard's decision to cut borrowing costs.

Wages for non-government workers rose 3.5 percent in the year ended Sept. 30, the fastest pace on record, the statistics agency reported on Nov. 3.

Total actual hours worked declined 0.9 percent from the second quarter and rose 0.2 percent from a year earlier, the agency said.

Full-time employment rose by 8,000 jobs, or 0.5 percent, in the third quarter after seasonal adjustments.

Part-time employment declined by 2,000 jobs, or 0.5 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.

NZ Unemployment Rises to Five-Year-High