First-quarter employment data appear strong but suggest spare capacity in the labour market is not yet a thing of the past.
Statistics New Zealand's labour market data for the three months ended March showed the unemployment rate lifting to 5.7%, above the 5.5% rate forecast by the Reserve Bank but in line with economists' forecasts.
The participation rate rose to 69% from 68.5% in December and total hours paid grew at a more measured pace, up 0.5% in the quarter.
The Labour Cost Index measure of wage growth was stronger than expected and in line with the Reserve Bank's forecast. However, wage growth remained muted and average weekly earnings in the Quarterly Economic Survey fell.
BNZ senior economist Craig Ebert described the labour market data as ‘‘fundamentally robust''.
There would be those who would jump on the lift in the unemployment rate but that would miss the broader point of employment picking up to a very strong pace and participation in the labour market again soaring.
There was even a strengthening in some key wage inflation measures. Hours worked attested to a good economic expansion in first-quarter gross domestic product growth, he said.
The unemployment result was ‘‘middling rather than weak'' but Mr Ebert said he failed to appreciate the strength of employment and participation in March.
The Household Labour Force Survey measure of employment increased a seasonally-adjusted 1.2%, following a 1% rise in December. That took its annual expansion to 2% from 1.4%.
By industry, construction was at the forefront with 8.2%. Employment in the category of agriculture, forestry and fishing was up 10% on a year ago.
In keeping with the rise, New Zealand's employment rate in March moved back up to 65.1%, from 64.9% in December.
‘‘This less-reported gauge on the labour market is arguably the most important, if not the most important, for judging the health of the labour market. On this score, things are looking very positive.
‘‘While international comparisons on this are tricky, we'd contend New Zealand's employment rate remains among the highest handful of any country in the world.''
