The official unemployment rate was 4.3 per cent in the March 2024 quarter, compared with 4 per cent in the previous quarter, according to figures just released by Stats NZ. 

Over the year, the seasonally adjusted unemployment rate rose 0.9 percentage points, up from 3.4 per cent in the March 2023 quarter. 

The underutilisation rate, a broader measure of spare labour capacity than unemployment alone, was 11.2 per cent in the March 2024 quarter. 

That compared with 10.7 percent last quarter, and 9.1 percent last year. 

“Underutilisation not only includes people who are unemployed but also part-timers who want and are available for more work, as well as people who want jobs but were either unavailable to start work or were not actively seeking,” labour market manager Deb Brunning said. 

The new level is the highest unemployment rate the country has experienced for three years, although still low by historical standards. 

The average unemployment rate since Stats NZ started compiling it in 1986 has been 5.5 per cent — roughly in line with where economists expect it to peak in this economic cycle. 

Over the year, unemployment rose 31,000 while total underutilisation rose 75,000. 

Increasing unemployment and underutilisation among young people (aged 15 to 24 years) comprised over half the national increase in each of these measures of spare labour capacity. Annually, youth unemployment rose 21,000 and youth underutilisation rose 44,100 (not seasonally adjusted). 

The employment rate declined annually due to working-age population growth. 

The employment rate was 68.4 per cent in the March 2024 quarter, down 0.6 percentage points over the quarter and down 1.2 percentage points over the year. 

Over the year, the number of people employed increased 36,000 to 2.9 million, while the working-age population increased 129,000 to 4.3 million. 

The employment rate represents the proportion of working-age people who are employed. As the rate of employment growth over the year was less than overall working-age population growth, the employment rate declined. 

“While the employment rate has declined from recent highs over the past year-and-a-half, it still remains high within the full Household Labour Force Survey (HLFS) timeseries, which began in 1986,” Brunning said. 

Previously 

Westpac senior economist Michael Gordon described the shifting labour market conditions as “a slow leak rather than a dramatic change”. 

Westpac was forecasting 4.2 per cent unemployment,in line with Reserve Bank expectations. 

“Employment is tracking ahead of what the Reserve Bank expected in its February monetary policy statement, but so is the migration-led growth in the workforce,” Gordon said. 

“We think these two factors will balance each other out. Our wage growth forecast is a bit lower, though the difference is trivial. The upshot is that we’re not expecting next week’s report to offer much to shift the RBNZ’s thinking.” 

Looking below the top-line numbers, the big question for economists will be: do they change the outlook for interest rates? 

While the Reserve Bank no longer has to formally consider unemployment in its calculations, today’s labour market data will provide important insight into how fast the economy is slowing. 

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. 

If you have a burning question about the quirks or intricacies of economics, send it to [email protected] ... or leave a message in the comments section. He’ll try to answer in Inside Economics, a new column published every Wednesday. 

This article was originally published on the NZ Herald here.