Large September quarter drop in unemployment rate unwinds in December quarter a tad more than expected; Wages rise 1.9% over the year 


The unemployment rate picked up in the December quarter a tad more than expected from the decade-low it fell to in the September quarter.

Statistics New Zealand data shows the rate rose to 4.3%, from 4.0% (revised up from 3.9%).

Given the surprisingly large fall in the unemployment rate in the September quarter, economists had expected this to reverse out in the December quarter.

They saw the unemployment rate rising to 4.1% (from that lower starting point of 3.9%).

However, as ANZ economists said earlier in the week, the figures have been volatile lately, so it would’ve taken a bit for the December quarter data to surprise them.

Economists across the board see the figures painting a more modest picture of the labour market.

Looking at wages, these were up 1.9% in the year to December – up 0.1% from the year to September.

The market had expected wages to rise by 2.0%. Increases in the private sector were greater than those in the public sector, at 2.0% versus 1.7%.

April’s minimum wage increase saw the retail sector make a key contribution to the hike in private sector wages.

In the public sector, wage inflation reflected the remaining two-thirds of the nurses’ pay settlement, which came into effect in August.

The release of the labour market data saw the New Zealand dollar fall from 68.3 USc to 67.6 USc – the lowest it's been in about two weeks. 

It is worth noting that Statistics New Zealand made a number of adjustments in its December quarter data, as it asked employed people extra questions when it gathered information as a part of its survey of working life.

Economists agree this has made the data volatile.

With the figures being the last set of important ones released before the Official Cash Rate (OCR) is reviewed and Monetary Policy Statement (MPS) published on February 13, this will make the Reserve Bank’s (RBNZ) job more difficult.  

Risk of a rate cut risen “meaningfully” in recent months

There is consensus among economists that the RBNZ will keep the OCR on hold this time around. While the outlook from there is divided, it is becoming less upbeat.

ASB chief economist Nick Tuffley says: “The labour market is still reasonably tight and the RBNZ looks to be meeting its objectives of “supporting maximum sustainable employment within the economy”.

“However, the lack of an inflationary smoking gun keeps the prospect of possible OCR cuts alive.”

Kiwibank economists Jarrod Kerr and Jeremy Couchman say: “Over the last year the direction of the labour market has generally been one way. That is, the labour market has tightened, demand for labour has been more than enough to offset a growing labour force, and wages are rising.

“Compared to the RBNZ’s November MPS forecasts the labour market is developing in line with their view.”

They say the risk of a rate cut has risen “meaningfully” in recent months, because offshore developments have worsened, and the outlook for credit growth is clouded.

ANZ economists are outliers in forecasting three cuts bringing the OCR down to 1.00% by next year.

ANZ senior economist Liz Kendall says: “Today’s data suggest that the labour market has stabilised, recent improvement has been only gradual, and that the best may in fact be behind us.

“The labour market is currently in “stretched” territory and firms are finding it difficult to find skilled labour. However, the labour market lags the overall activity cycle, and the current degree of tightness reflects the past few years of economic expansion.

“Looking forward, growth momentum has faded and it looks increasingly difficult for the economy to grow above trend from here. Given this, we suspect that the peak in resource pressures may have passed…

“Today’s data could add to a more cautious tone from the RBNZ next week, even if their central forecasts do not change significantly.”




Low GDP, rising unemployment. Yep, this is Robbo's limp economy now.

Yip , the rockstar is having withdrawal symptoms .......

Indeed, below are my predictions from 9th September 2018. I'll take a look at Q1 figures when we get them, but in the light of these early numbers I may have to review my forecast. This is what happens when you have a 'credit driven bubble.' and credit growth slows.

'Unemployment will hit 6% by Q2 2020 rising to a peak of 7.4% by Q4 2021'

I think you left the bit out where you predicted NZ GDP to go negative in Q2 2019

I still believe it will, unless of course you go out and borrow a bit more to keep it all going...

Withdrawal from massive debt expansion is tough. It was incredibly shortsighted to indulge so much government borrowing and land value growth.

What government borrowing is this exactly??? We have a very low level of public debt. The government's surpluses and paying down of debt is precisely what is requiring economic growth via private debt expansion given our current account deficit. The surpluses are ridiculous and causing a slowdown. If they won't spend on socially and environmentally useful projects, at least give low and middle income earners a tax cut.

and this is global so hardly a surprise.


so we can cut the immigration then, not needed now

~5% of NZ's work force (100-150k?) is working on a temporary work visa. We can't afford to cut immigration, with low unemployment we desperately need the workers.

I disagree Foyle. Credit growth is not rising fast enough now to support more people in the labour market and a rise of 10% in the unemployment rate in 3 months suggests more elasticity ahead.

The slack will soon be there in the labour market for all your employment requirements... except the employees may need more care and attention from employers than those that have the constant worry about a 'work visa' being revoked by their employers. No need for us to make the same mistakes that were made in Europe when they had their 'credit tap' tighten 10 year ago. Recessions are normal and good businesses adapt and get better, the bad ones die and are replaced by more innovation. Some who are highly leveraged lose out, but new entrants start the next cycle with lower debt and more opportunity. Recessions happen, it's just we've all become a bit soft and the constant bleating for lower rates and more immigration has perpetuated the Australasian bubble a bit longer than it should have..

The people who will be without jobs during a recession are mostly the low intelligence or otherwise flawed types - the edges cases for economic employability. The immigrant workforce is mostly smart and hardworking. You can't replace the latter with the former economically, no matter how much you wish it were possible.


I don't disagree, many immigrants are very smart. Others however aren't, but are cheap and malleable/easy manipulated and in my opinion that is the wrong solution if you want to prevent 10-20% youth unemployment for our kids as was the case when the PIGS debt bubble imploded. I'd prefer to have my kids have a reason to stay in New Zealand.. You?

We have smart and we have dumbish immigrants on work visas. To split the sheep from the goats introduce a work permit fee - say $20k pa - then the teachers, doctors and engineers would stay and the checkout operators leave. Our 4.3% unemployed ought to be able to operate a checkout even if they are not as docile as immigrants and as a bonus the govt makes more income. Could even direct it to training courses for our increasing pool of unemployed.

I agree, most people are unemployed because they havn't done enough courses yet. If we get them on more courses, unemployment will drop. People in courses, are not classed as unemployed.

Teachers start on $48k and we needed to bring in over 200 this year and many schools are still short. Charging $20k is not going to work.

rubbish.....we dont need cheap foregin labour to hold down NZ labour's value.


Except that Winston Peters lied to us during the election promising to "hit the pause button " on immigration.

They have continued to pour in here since the 2017 election .

The Cambridge English Dictionary defines Pause as :- " To STOP doing something for a period of time "

What has the Government done ? ........... SFA

A lying Politician, what's new? Show me one that doesn't lie. I would like to see that.

Hi Jenee
Typo's above. Should be 0.2% rather than 0.3%. (Not 2 and 3%)
Cut the cash rate to increase the 'credit impulse' and subsequent crash the NZ dollar coming soon.
Wonder Roger's long term view on the kiwi. Still bullish?

Immigration falling (or being re-calculated), unemployment rising and on the original Q3 numbers of 3.9% that's pretty much a 10% increase in the unemployment level in 3 months.
Sounds a bit like Ireland in 2007.

In our economy it is under-employment that matters. Note those Ukranian restaurant owners in St Heliers were claiming they emplyed many Kiwis but INZ say many were on zero hour contracts and some may be immigrants without documentation.
Still feel sorry that they are under threat when if they had been kick-boxers importing drugs and wanted by the police back home then they would have been welcomed.

If this is an inflection point in the cycle it might be the new government's first real economic challenge.

I'm sure they will manage to do everything they can to worsen the situation. Increase minimum wage, unemployment goes up! Who could've guessed.

One hopes these losers running the country are keeping an eye on this , while its just a small blip we need to ensure there is not a trend here .

Anyway , we now have a minimum wage that's too high in relation to productivity , and a welfare system that seem to be going soft on job-seekers not turning up at interviews


The economy has simply been a private debt bubble Boatman. Private credit growth stalled at 6% last year. The 60 billion odd of mortgages taken on was not enough to keep the bubble going... nor could it go on much longer anyway. No point blaming this government, but the last government had a leader who was very in tune with the banking industry... The key to stopping a collapse now is for the new government to try and replace private debt growth with government debt.... Which is essentially kicking the can down the road a bit longer. Or we take some medicine now and start living within our means for bit, learning how to produce things again, rather than speculating on the bankers false dream that the we could bet it all on the 'house'

Sorry Nic ........... Compounded GDP growth was spectacular in the past 9 years of the Nats , as was personal savings level increases , capital formation and personal wealth levels increased

We saw a huge increase in income from tourism and agri-produce, our industries boomed .

During the GFC we were the envy of the OECD

Inflation was brought down to almost ZERO

Interest rates are the lowest in my lifetime

Personal tax is the lowest in my lifetime

The budget surplus that Billy Bunter is throwing around like confetti was all Bill English and John Key's hard work .

This Coalition Government has been in office long enough to shoulder full responsibility for this increase in unemployment , even though it may be small or even cyclical


Compounded GDP growth may have been "spectacular", but so also was population growth. Per capita I don't think we gained anything.

And inflation may have been almost zero, provided you don't look at housing costs which skyrocketed over the period.

"The budget surplus ...was all Bill English and John Key's hard work ."
I'm not so sure about that...

"Clark's fifth Labour Government reduced debt from 22.6 per cent of GDP in 2000 to 5.5 per cent in 2008.
That same Labour Government went from a $386 million deficit in 2001, to a $2.8b surplus in 2008. During Key's National Government, debt as a percentage of GDP went from 9.1 per cent in 2009 to 24.6 per cent in 2016."

The GDP 'increase' was more than likely the Broken Window Fallacy of the Christchurch Earthquake and the re-build, and as this article notes, neither and both Parties are better or worse than each other. It's a matter of priorities...

Seems you need to read a little economic history. Clark and Cullen left a massive structural deficit through their final term splurge in bureaucratic growth and spending promises. The pre-2008 election PREFU (created by neutral Treasury) projected a rise to 30% debt! For a little history on the matter:

Labour left NZ in recession (pre GFC), and then Key and English had to weather the twin shocks of the GFC and the earthquakes, and yet still managed to halt the string of deficits in just 6 years at 5% below the debt levels estimated in that 2008 PREFU. They weren't perfect managers of NZ, but we were truly blessed that they were the ones in charge through that period.

uh and like kiwiblog is trustworthy?

Neutral Treasury? are you kidding?

No they didnt leave a structural deficit, they were paying that deficit down, structurla it was not. Then the GFC started to hit and the tax take collapsed, jobs lost so benefits cost climbed hardly suprising. A decade of debt? yes sure as the GFC bit.

Meanwhile you lean on the likes of kiwiblog, a biased right wing opinion site for your data and comment? good luck with that.

PS Could this GFC have been allowed for? no not really yet we were without doubt lucky we didnt suffer huge impacts unlike the USA.

We now know, given the levels of historic immigration, that paying down debt is Kafka-esque speak for "not paying for critical infrastructure" - but it's far easier to just accuse the Nats of doing it and pretend Clark's Govt was all sunshine and rainbows. And just because Kiwiblog is right leaning doesn't mean it's wrong; we did have a prolonged recession, nor does it change the fact Cullen spent up any surplus in the Budget once the writing was on the wall and Labour were on the way out.

The dichotomy of structural vs. infrastructural deficit suggests we all need to take a good hard look at what infrastructure and services we expect from our governments and what sort of revenue it takes to provide that.

agreed the Clark government never used the surplus to build infrastructure , instead they used it in the last term to create middle income welfare in the form of WFF, one of the worst uses of money that I can think off.
it does nothing but create dependence on the government

That and the campaigning on the housing crisis were reasons people voted for Key instead of Clark. As Key called WFF, "communism by stealth".

However, the campaigning was not followed by action, but a change of subject.

It was compounding private debt growth that was causing it. The debt growth was spectacular. The household savings rate has largely been abysmal in NZ

(best to max the tab out on this to see how John and Bill managed to balloon the private debt to help their GDP numbers) - house prices double every ten years? It's just debt driving GDP Boatman, coupled with a trade deficit (Ireland ran a surplus before and during their credit bust) and also had positive household savings, so we've got challenges on the horizon Think of negative gearing. massive levels of interest only debt and high lending multiples of mortgage to household income as being vehicles for uncle John to inflate our bubble a lot longer and keep GDP going. The last government, the media and banks are all complicit in doing the job of keeping the blinkers on the 'dumb boomers' that kept them feeling rich and borrowing more. There are some smart boomers who have seen it for what it was and are already out of the bubble. John Key, Mike Hosking to name a couple.

I've not heard the mention 'Rockstar economy' in a while? Ever heard of the PIGS?

No households in NZ rarely save, see below.

I think that Mike Hosking possibly received "advice". He's not stupid, but I think that he's not as clever as John Key.

Is this satire? "The last Government" did pretty much what the Labour Govt did up to 2008 - look the other way on property prices and use it as a distraction for the then 39 percent tax rate kicking in at a pathetic $60K. People didn't care if you taxed them because their houses were going up in value and they felt rich. But of course, all of NZ's ills began when National came into power, and everything was just tickety boo before then. Just ignore the faster-than-National property price rises, lack of meaningful tax reform and immigration that Clark presided over and you're good to go!


I agree with you, which is why it is difficulr to pin bubble blame on either Labor or National. The problem is a heck of a lot bigger and peculiar to the Anglo-Saxon economies, who are the architects and promoters.

.. and con artists ?

The problem is, many people voted because of Labour's failure to manage the housing crisis, and because of John Key's campaigning on the issue:

To do a complete about face and spend the next nine years denying any such crisis exists was the Key problem.

Yep, that's inexcusable. No arguments here; although the *National did nothing* meme is played out and factually wrong to boot.

But that is the problem - governments whatever their flavour will f**k up - get over it and grow a spine and realise you can't rely on the government (for it you do you will be disappointed at some point) and get on with it. If you have to rely on a "business friendly" government (whatever that means) - maybe, just maybe your business isn't as good as you think it is.

I agree that economic growth in NZ has largely been sustained by private sector debt and running down household savings.
But I disagree that fiscal austerity is the cure.
The experiment in the UK and the Eurozone in the last 10 years is pretty much living proof that expansionary fiscal contraction is "not a thing". Greece, with its massive surpluses is rapidly turning into a nightmare. Italy is returning to Mussolini politics. France is unstable. Mini trumps are everywhere. Fiscal austerity is not the answer.
Japan is where one should look to. Sustained deficit spending (they probably need more though) is keeping things on a better (perhaps overly cautious) pathway with no inflationary pressures and no sudden fall in the value of the Yen or rise in bond yields. Overt monetary finance is being done sensibly and judiciously and this is where NZ should look to.

That revision was due to a measurement change - under the old numbers it went from 3.9% to 4.4%. That's a 12.8% increase in just 3 months. But just like immigration numbers, you can lower them just by changing how you count them. Cool eh?

Jenee didn't include the really destructive data:
15 – 19 year old unemployment rate up from 15.2% to 21.2%
20 – 24 year old unemployment rate up from 6.3% to 8.3%
15 – 19 year old NEET rate up from 7.6% to 11.4%
Abolition of youth rates starting to wreck destruction on lives of young people as anticipated? Turning them into long-term unemployed? Rise in minimum wages going to do further damage?

We recommend caution when using the latest data on people aged 15–24 years who were not in employment, education, or training (NEET), and to focus on longer-term trends.

The distribution of our data collection throughout the December 2018 quarter affected the rise in NEET youth. More people than usual were surveyed towards the end of the quarter, when tertiary education had ended for the year. This means Stats NZ was more likely to have captured youth who had ended their studies, and not yet started work or further study.


Some seasonally adjusted employed and NILF series were not further adjusted (eg the number of people employed, broken down by age; underemployment; and youth not in employment, education, and training series). These series may show unrealistic movements this quarter. We recommend users exercise caution when considering the latest data and focus on longer-term trends.

May need to wait till next quarter to see if the data is accurate or is going to correct itself next quarter.

Thanks pragmatist, that makes sense.

At least they are young enough to train and learn, as long as we don't kill their chances by importing cheaper replacement workers. Also in your youth there is a great deal to learn, stacking shelves, working in shops, petrol stations, picking fruit. Teaches you a lot about hard work, it gives you responsibility and also provides the motivation for those that want to upskill and do something else the employment experience of dealing with customers and the opportunity to go out and do it.

Those youth figures are a worrying leap in numbers... I hope the babyboomers who are running businesses realize that if these people leave the Country then property won't be an asset class moving forward.

Train them as tradies ASAP and get those houses built!!

100'000 affordable houses in 8 1/2 years


I'm a qualified tradey working an office job, the pay is still not competitive for the sacrifices.

No new immigrants! who is going to deliver your Uber Eats, picking those apples from the trees at you are eating, keeping the trains cleaned for you.. kiwis just don't want to do it!

if the pay was good they would, that's the problem with a low wage economy you have to import more and more low wage employees

They put pay rates up for caregivers in rest homes by $5 an hour , still can't get New Zealanders to do the job.

put it up more then, eventually you will make it an attractive option to work there.
i have seen this argument everywhere, and 90% it comes back to pay and what people will accept against what an employer wants to pay.
my own industry workers pay has been stagnant since 2008, and the percentage of kiwis has declined with most gone to aussie for better pay and living conditions,

Raising the minimum wage, also raises unemployment, a self evident truth. I can't wait to see where unemployment sits once the minimum wage is $20.

Solved by inflation caused by high min wage?

Does anyone believe the 4.3% number?

Follow that link to the stats website. Scroll about 1/3 of the way down where you'll find:

Total underutilised: 351,000. Of which
119,000 are underemployed
120,000 are unemployed and
112,000 are 'potential labour force, of which 87,200 are 'potential job seekers' and 25,000 'unavailable jobseekers'

I have no idea what a 'potential job seeker' is, but it sounds very much like some unemployed people. And the other 25,000 do too.

So we really have circa $351k people in this country of working age, who don't work. And people say we need more immigrants. FFS.

The labour underutilisation rate explains our low wage inflation better than the unemployment rate. We have a lot of underemployed people in NZ. 1 hour a week does not an "employed" person make.

You're right it seems illogical to bring in immigrants when our own unemployed etc "could" do the job. But, can they or will they do the job? You know the safety net has become a hammock for most.