Unemployment and underemployment continued to fall in the March 2018 quarter, according to quarterly labour market statistics released by Stats NZ today. The unemployment rate is now 4.4 percent, the lowest since the December 2008 quarter. This represents a decrease of 0.1 percent from the previous quarter and an annual decrease of 0.5 percent.
The underutilisation rate, which measures people who want or could work more but don’t, fell to 11.9 percent, down 0.3 percent on the December 2017 quarter. This represents almost 340,000 people whose labour is under utilised by the economy.
The big story underlying the fall in the underutilisation rate is the slow convergence of underutilisation rates for men and women. Of the 9000 formerly under-employed people who no longer say they need or want more work, 8000 were women. The underutilisation rate for women is now 14.6 percent, down 15.2 percent from December 2017. The rate for men is 9.4 percent.
In spite of falling unemployment and underemployment, wage inflation remains low. The labour cost index, which measures wage inflation, increased 0.3 percent in the March 2018 quarter. It increased 1.8 percent from the year before. This suggests an even greater drop in unemployment and underemployment is possible before triggering any serious wage inflation.
Unemployment is still highest in the regions. Bay of Plenty leads with 5.9 percent, followed by Northland (5.8 percent) and Gisborne/Hawke’s Bay and Taranaki (both at 5.1 percent).
The good news is that all of these regions saw above average declines in unemployment. In Gisborne/Hawke’s Bay the rate fell 2.5 percent from March 2017, in Northland and Bay of Plenty it fell 2.2 percent and 1.7 percent respectively. In Taranaki the rate fell by 1.7 percent.
The only regions to see an uptick in unemployment were Nelson/Tasman/Marlborough/West Coast, where unemployment increased 0.8 percent, and Otago where it increased 0.3 percent.
Despite the implementation of the Government’s first year free tertiary education policy, the number of youth not in employment, education, or training (NEET) rose to 12.4 percent in the March 2018 quarter, up from 11.8 percent in December 2017.
This is the highest rate since March 2016, apart from December 2016, when the figure was 13.5 percent.