Labour shortage feared as unemployment drops

Dougal McGowan.
Dougal McGowan.
New Zealand's unemployment rate has fallen for the quarter to June to 4.8%, as expected by analysts, but raises further existing concerns about labour shortages.

Construction, hospitality, tourism and some aspects of the manufacturing and service sectors have all been concerned since last year about finding staff.

Unemployment eased from 4.9% in the March quarter to 4.8%, which was the lowest unemployment rate since December 2008, after the start of the global financial crisis (GFC), when it was 4.4%, Statistics New Zealand labour market and households senior manager Diane Ramsay said.

Overall for the June quarter, 3000 fewer people were unemployed.

Nick Tuffley.
Nick Tuffley.
The unemployment rate for women fell to 4.9%, with 10,000 fewer women unemployed, the lowest since March 2009, while conversely the male unemployment rate rose to 4.7%, with 7000 more men unemployed.

Otago Chamber of Commerce chief executive Dougal McGowan said yesterday's data reconfirmed a recent chamber business confidence survey, where 20% of respondents said labour was the biggest limiting factor to their businesses' growth.

''This will just add to the pressure already seen throughout a number of sectors around the country and region.''

There was still strong demand for labour in marketing, surveying, engineering and project management, throughout Dunedin and Otago, Mr McGowan said.

''There's also been a recent increase in middle to senior leadership roles, particularly in Dunedin, but also throughout Otago,'' he said.

What was unexpected by analysts was the employment rate, which for the six previous quarters had risen, but for the quarter to June dipped from 67.1% to 66.7%; meaning 4000 fewer people were employed.

ASB chief economist Nick Tuffley said the unemployment rate having ''edged down'' to 4.8%, was as expected.

The lower unemployment rate was the result of the labour force participation rate dipping; participation tends to follow the direction of employment to a degree, he said.

''[However] the softness in employment growth is surprising, especially given employment indicators were robust over the quarter.

''Annual growth is, nevertheless, strong at 3.1%,'' Mr Tuffley said.

Westpac senior economist Satish Ranchhod said data reflected ''continued moderate growth'' in economic activity, but still ''muted'' wage pressure.

Wage growth was currently subdued but was expected to rise over the coming year, consistent with growth in economic activity and rising consumer price inflation, Mr Ranchhod said.

''However, the extent of any wage increases may be modest for some time,'' he said; but with the notable exception of some health sector care workers whose earnings would be boosted by the recent wage adjustment agreement.

Tertiary Education, Skills and Employment Minister Paul Goldsmith was quick to respond to the unemployment rate being at its lowest since late 2008.

''Our strong economy continues to deliver for New Zealanders,'' he said.

He noted strong job growth was continuing with 76,000 new jobs during the past year and 181,000 new jobs in the past two.

He said it was ''particularly pleasing'' to see a reduction in the number of young people not in employment, education or training, falling from 12.7% the previous quarter to 11.1%.

simon.hartley@odt.co.nz

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