Employment & unemployment - June 2006

Last updated 10 August 2006

Background

This report informs you about the Household Labour Force Survey (HLFS) results for the June 2006 quarter. The HLFS was released by Statistics New Zealand on 10 August 2006. All figures refer to the working-age population (15 years and over) and are seasonally adjusted unless otherwise specified. Terms are defined in the appendix.

Key points

New Zealand labour market remains very strong...

A number of HLFS records were broken this quarter.  A record large rise in full-time employment helped lower unemployment back to an equal record low rate, the rate of labour force participation is at an all-time high, and underemployment fell to a record low.

The results exceeded average market predictions of no employment growth and a steady unemployment rate.  Nevertheless, strong employment growth is in line with growth in paid hours in the Quarterly Employment Survey and the fall in unemployment is consistent with fewer unemployment benefits.

...as high full-time employment growth continued...

The first half of 2006 saw strong employment growth of 1.1% in the March 2006 quarter and 1.0% in the June 2006 quarter, lifting annual growth to a strong 3.0% in the year to June 2006 (Figure 1).  A record high proportion of working-age people (66.3%) are now in work.

Full-time employment (30 hours or more a week) led the way again.  A rise in full-time work of 25,000 people, the largest rise since the HLFS began in 1986, more than offset a decline of 4,000 people in part-time work (fewer than 30 hours a week).

Fig 1: Employment growth

Source: HLFS, Statistics New Zealand

Fig 2: Unemployment & participation rates

Source: HLFS, Statistics New Zealand

The strength of labour demand seen in the HLFS and QES are positive signs for economic growth in the June 2006 quarter (June 2006 quarter Gross Domestic Product data are due for release on 29 September).

...the unemployment rate fell to an equal record low...

The unemployment rate reversed the previous quarter’s rise by falling from 3.9% to 3.6% in the June 2006 quarter (Figure 2).  This is the equal lowest since the HLFS started.  The unemployment rate has been relatively stable since falling below 4% in the second half of 2004.

New Zealand’s unemployment rate remains the second lowest of the 27 OECD nations with comparable data.  South Korea stayed in first place at 3.4%, while Norway, Denmark and the Netherlands dropped below 4% and the OECD average fell to 6.1%.

Underemployment (part-timers who want to work more hours) dropped to 71,900 in the June 2006 year.  This is the lowest number of underemployed since the question was first asked in 1990.

...and the participation rate rose further to a new record high

The first half of 2006 has seen a large rise in the proportion of working-age people participating in the labour market (Figure 2).  The participation rate rose from 67.9% at December 2005 to a record 68.8% at June 2006.  The rise was driven by female (from 61.9% to a new record high of 62.2%) and male participation (from 75.6% to an 18-year high of 75.7%).

Table 1: Recent HLFS results

Labour market indicator	Sep 2005	Dec 2005	Mar 2006	Jun 2006
Working-age population (000s)	3,176	3,189	3,203	3,212
quarterly % change	0.2	0.4	0.4	0.3
Employment (000s)	2,085	2,085	2,108	2,129
quarterly % change	0.9	0.0	1.1	1.0
Unemployment (000s)	79	79	86	79
quarterly % change	1.5	-0.6	9.9	-8.5
Labour force participation rate (%)	68.1	67.9	68.5	68.8
Unemployment rate (%)	3.7	3.6	3.9	3.6

Source: Household Labour Force Survey, Statistics New Zealand

Employment growth based across several industries

Employment growth in the year to June 2006 was driven by strong growth in construction, a positive contribution from the primary sector, and growth in services such as business & financial and wholesale & retail trade.¹

All regions have an unemployment rate at or below 5%

The unemployment rate was equal to or below 5% in all regions in the year to June 2006.  The largest fall between the years to June 2005 and 2006 occurred in Southland, which also recorded the lowest unemployment rate at 2.7%.  Northland still has the highest unemployment rate of 5.0% in the year to June 2006, followed by Gisborne-Hawke's Bay at 4.6% (Figure 3).

Fig 3: Unemployment rates by region

Source: HLFS, Statistics New Zealand

Fig 4: Unemployment rates by ethnicity

Source: HLFS, Statistics New Zealand

Participation rate trends up for all ethnic groups

The unemployment rate for Maori fell to 8.5% in the year to June 2006 (Figure 4).  This is the lowest rate recorded since the HLFS began in 1986.  The annual average unemployment rate for Europeans fell to 2.6%, while the rate for Pacific Peoples was steady at 6.4%.

Labour force participation rates continued to rise for all ethnicities.  In the June 2006 year, a record high 67.3% of Maori were in the labour force and the participation rate for Pacific Peoples rose to an 8-year high of 62.9%.

Higher participation and lower unemployment for 15-24 year olds

For 15-24 year olds in the June 2006 year, the unemployment rate fell to an 18-year low of 9.2% and the participation rate rose to a 7-year high of 64.3%.  The largest improvement was for 20-24 year olds (unemployment rate down to 6.1% and participation rate up to 74.4%).  Although the rate of unemployment rose slightly for 15-19 year olds to 13.2% in the year to June 2006, their participation rate rose to 54.9%.

Endnotes

1 The industry, regional, ethnic, and age data are not seasonally adjusted and are averaged over a year to reduce seasonal variation and sample error.

APPENDIX: Terms and definitions

The following is a list of the main terms that we use to describe the labour market, together with definitions of these terms. The table below illustrates how the terms relate to each other.

Working-age population

usually resident non-institutionalised civilian population aged 15 years and over.

Labour force

number of people who are either in work or are available and actively seeking work (that is, employed or unemployed as defined below).

Employment

number of people in work of one hour or more per week.

Full-time/part-time employment

full-time workers usually work 30 hours or more per week, and part-time workers usually work less than 30 hours per week.

Unemployment

number of people who are not in work, but who are available for and actively seeking work.

Not in the labour force

number of people who are not in work and are either not available or not actively seeking work (that is, they are not employed and not unemployed). For example, in the year to June 2006, 47% of these people were retired, 18% were studying, 17% were at home with children, and 11% were at home not looking after children

Labour force participation rate

proportion of the working-age population that is in the labour force (68.8%).

Unemployment rate

proportion of the labour force that is unemployed (3.6%).

Employment rate

proportion of the working-age population that is employed (66.3%).

Fig 5: Labour Market Summary