Key results

• The HLFS showed that employment rose by 1.0% over the September 2010 quarter and the unemployment rate fell from 6.9% to 6.4%.
• The increase in employment was higher than expected and the unemployment rate was more positive than forecast. 
• Hours worked rose by 0.8% over the September 2010 quarter.  Together with strong employment growth this indicates that firms are starting to take on new staff rather than increasing the hours of existing staff.
• New Zealand has the 11th lowest unemployment rate of the 33 OECD countries and is below the average OECD rate of 8.5%.
• The HLFS measure of unemployment remains volatile and we could therefore see the unemployment rate rise again in the December 2010 quarter, although the trend clearly shows that unemployment is declining and peaked at 7.1% in the December 2009 quarter. 

Which industries and groups have done well?

• Part-time employment increased by 2.7% (or 13,000 people) over the quarter, and full-time employment was up by 0.6% (or 10,000 people).
• Youth employment rose by 2,400 over the year which helped their unemployment rate fall from 16.8% to 16.2%.  
• The male unemployment rate dropped from 6.9% to 5.7% over the quarter.
• Compared to a year ago, employment increased strongly in agriculture, forestry & fishing (up 13,200), education & training (up 6,700) and arts, recreation & other services (up 6,500).  Manufacturing employment was flat.
• Employment of older workers (aged 55+ years) rose to 447,300, up 7.1% (or 29,600 people) from a year ago.
• Compared to a year ago, the unemployment rate fell strongly in Gisborne/Hawke’s Bay (7.0% down from 10.0%), Otago (3.6% from 5.6%), and Northland (8.0% down from 9.3%).

Which industries and groups have not done so well?

• Female unemployment rose from 74,000 to 80,000 over the September 2010 quarter, which saw the female unemployment rate increase from 6.8% to 7.2%.
• The September 2010 quarter results showed that compared to a year ago employment in financial & insurance services fell by 8,600, while transport, postal & warehousing employment dropped by 1,600.
• The ‘Māori only’ unemployment rate rose over the year to reach 16.2% (from 14.2% a year ago) while the ‘Pacific peoples only’ unemployment rate increased to 13.5% (from 12.3% a year ago). 
• The regions with the highest unemployment rates were Bay of Plenty (8.6%), Northland (8.0% in spite of a large improvement) and Auckland (7.4%).

Commentary

Labour market conditions improve strongly

The latest HLFS showed that the labour market continued to recover over the September 2010 quarter.  Employment rose by 1.0% and the unemployment rate declined from 6.9% to 6.4%.  Despite the significant volatility seen in the HLFS data over the first three quarters of 2010, the September 2010 quarter results confirm that the unemployment rate has reached its peak and the labour market is improving.  

Employment rises by more than expectations

Employment rose by 1.0%, or 23,000 people, over the September 2010 quarter after increasing by 0.8% over the first half of 2010 (Figure 1).  The rise in employment was above market expectations. 

The rise in employment over the September 2010 quarter was driven by increases in both part-time employment, up 2.7%, while full-time employment increased by 0.6%.  The rise in employment was driven almost entirely by a 1.9% increase in male employment.  Female employment also rose, but only by 0.1% over the quarter. 

Fig 1: Employment growth

Source: HLFS, Statistics New Zealand

Data Table for Figure 01

Fig 2: Unemployment & participation rate

Source: HLFS, Statistics New Zealand

Data Table for Figure 02

Hours continue to rise

Total hours worked rose by 0.8% over the September 2010 quarter, less than the increase in employment.  This indicates that employers are now hiring new workers instead of increasing the hours of existing employees. 

The unemployment rate falls to 6.4%

The unemployment rate fell from 6.9% to 6.4% over the September 2010 quarter (Figure 2), better than expectations of a relatively steady unemployment rate.  While the unemployment rate has been volatile over recent quarters, the HLFS confirms that the unemployment rate reached a peak of 7.1% in the December 2009 quarter.

The September 2010 quarter results show there has been a significant divergence in labour market outcomes by gender.  The male unemployment rate fell strongly, from 6.9% to 5.7%, while the female unemployment rate rose from 6.8% to 7.2%. 

There appears to be two reasons for the large fall in male unemployment over the September 2010 quarter: 

Firstly, there was a large decrease in the number of 15-19 year olds who were unemployed.  Instead of entering employment, these young males left the labour force altogether, perhaps choosing to enter study or training. 

Secondly, employment growth over the past year has been concentrated in male-dominated industries.  For example, there was a 9.6% increase in employment in the agriculture, forestry & fishing industry over the past year.   

The number of people unemployed now stands at 150,000, down 6.1% from 160,000 in the June 2010 quarter but level with a year ago.  Long-term unemployment (those unemployed for longer than 26 weeks) increased by 8.1% to 38,300 over the year to September 2010.

The labour force participation rate increases

The labour force participation rate increased to 68.3% over the September 2010 quarter, up from 68.1% in the June 2010 quarter.  It appears many people have been encouraged to enter, or remain in, the labour force by rising employment opportunities.  

The labour force participation rate for males increased from 74.4% to 74.8% over the September 2010 quarter while the female labour force participation rate rose from 62.0% to 62.2%.  

The youth unemployment rate decreases

The unemployment rate for youth (those aged 15-24 years) has fallen over the past year.  The youth unemployment rate now stands at 16.2%, down from 16.8% a year ago.  This is the first time since March 2008 that youth unemployment has fallen on an annual basis. 

Youth employment rose by 0.8%, or 2,400, over the year to September 2010.  This is the first time youth employment has risen on an annual basis since New Zealand entered recession in early 2008.  However, the rise in employment was driven entirely by the 20-24 year old age group, while employment for 15-19 year olds continued to fall.

The unemployment rate for Māori youth was 26.8% in the September 2010 quarter, almost identical to the 26.7% rate recorded a year ago.  The Pacific youth unemployment rate rose from 27.9% to 29.8% over the year. 

The NEET rate (the proportion of 15-24 year olds not in employment, education or training) continued to decline in the September 2010 quarter.  There were 65,400 youth who were NEET in the year to September 2010.  This represented 10.4% of all 15-24 year olds, down from 10.7% in the year to June 2010 and 10.8% in the year to March 2010.

Labour market conditions for Māori and Pacific remain challenging

The unemployment rates for the ‘Māori only’ and ‘Pacific only’ ethnic groups increased to 16.2% (up from 14.2% a year ago) and 13.5% (up from 12.3% a year ago) respectively.  Despite a rise in their unemployment rates, employment for these two ethnic groups has risen over the past year.  Employment for ‘Māori only’ has risen by 0.6% and by 2.2% for the ‘Pacific only’ ethnic group.

The unemployment rate falls strongly in Gisborne/Hawke’s Bay and Otago

The unemployment rate has fallen in a number of regions over the past year.  In particular, the unemployment rate in Gisborne/Hawke’s Bay fell from 10.0% to 7.0% while it decreased from 5.6% to 3.6% in Otago (Figure 3).  Wellington and Northland also experienced a large fall in their unemployment rate.  In contrast, there were significant rises in the unemployment rate in Taranaki, Southland and Manawatu-Wanganui.  Otago saw a significant rise in employment (up 19,300 over the year), which helped lower the unemployment rate over the year.

The regions with the highest unemployment rates were Bay of Plenty (8.6%), Northland (8.0% in spite of a large improvement) and Auckland (7.4%).  The unemployment rate in Auckland was up from 6.5% a year ago.

Fig 3: Unemployment rates by region

Source: HLFS, Statistics New Zealand

Data Table for Figure 03

The labour market is expected to continue to recover

The September 2010 quarter HLFS suggests that the labour market improved strongly over the third quarter of 2010.  We expect a modest improvement in labour market conditions in the December 2010 quarter, however labour market data remains volatile and we expect this volatility to continue over coming quarters.  Therefore, we could see the unemployment rate rise again in the December 2010 quarter, although the trend clearly shows that unemployment is declining and peaked at 7.1% in the December 2009 quarter.

Looking forward to 2011, we expect employment growth to continue, in line with rising employment intentions, increased business confidence and growth in the number of job advertisements.  This should see the unemployment rate continue to trend down slowly, falling to around 6.0% in mid-2011.         

Structure of the Labour Market: September 2010 quarter (seasonally adjusted)

Long Description For Figure