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Thursday May 8, 3:10 PM
New Zealand jobs fall sharply as economy slowsThe number of jobs in New Zealand fell at the fastest rate for 19 years in the March quarter as the economy braked sharply, official figures showed Thursday. Although the economy has been slowing rapidly this year, jobs were not expected to be badly affected until later in the year. Most economists had expected employment to be steady in the March quarter.
This was the largest quarterly fall in employment since the March quarter of 1989. The unemployment rate rose to 3.6 percent from a record low of 3.4 percent in the previous quarter, SNZ said. The smaller change in the unemployment rate compared with the sharp drop in jobs was explained by more people giving up looking for work. The participation rate dropped by 0.9 percentage points to a three-year low of 67.7 percent. Much of the decrease in jobs was driven by a fall in female full-time employment of 22,000, following an increase of 31,000 in the previous quarter. Economists said the unemployment news may prompt the central bank to bring forward interest rate cuts, which had not been expected until late in the year. "From our perspective, the fact that employment has fallen so early when it is normally a lagging indicator concerns us," Westpac Bank chief economist Brendon O'Donovan said. The figures, which he described as a "genuine shocker", meant the central bank's first rate cut was likely to come in September. Despite slowing economic growth, the Reserve Bank of New Zealand has held the official rate steady at 8.25 percent because of persistent inflationary pressures. The New Zealand dollar fell sharply after the jobs news due to expectations the first interest rate cut will be brought forward. The local currency ended local trading Thursday at 77.28 US cents, sharply down from 78.19 before the jobs data. More evidence of a sharp slowing in the economy came on Wednesday when homeware and sports retailer Briscoe Group reported a 10 percent slump in same store sales in the April quarter and predicted other retailers would be similarly hurt.
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