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160,000 people out of work as unemployment figures increase to 8-year high

Business

Marcus Allan
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160,000 people are out of a job in New Zealand  Reuben Smith/NZBS

Data released by Stats NZ this morning shows New Zealand's unemployment rate has increased from 5.2 percent to 5.3 in the three months to September.

That is 160,000 people out of a job in this quarter. Of that, 22,700 had been unemployed for a year.

"The unemployment rate has been over 5 per cent for the last four quarters. The last time that the unemployment rate was 5.3 per cent was in the December 2016 quarter." Stats NZ labour market spokesperson Jason Attewell says.

Independent Economist, Cameron Bagrie, told Metro News this is due to a weak economy.

"The Reserve Bank [has] beaten the economy up. Unemployment is a lagging indicator, so it takes a little bit of time before it responds to weaker growth."

Infometrics Chief Economist, Brad Olsen, said it's been a "wild ride" for unemployment in the last eight years.

"It was a real turnaround in the labour market over the last couple of years.

"We got it down below effectively sustainable rates for a period when we had unemployment below 4 per cent."

Olsen said at this time, there was so much work available, but this also pushed inflation up.

"To get rid of that higher inflation, you've seen the Reserve Bank increase interest rates to try and pull back economic activity, and that's clearly worked…and therefore not quite as much work to be done."

He said our growing population has lifted unemployment rates to the highest since 2016.

Regionally, Hawke's Bay, Gisborne and Auckland saw the most significant increases this year. Hawke's Bay and Gisborne were up to 5.9 per cent, with Auckland increasing to 6.1.

"Every part of New Zealand is not dancing to the same tune," Bagrie said.

"What we do know is that places such as Auckland…are doing it a little bit tougher than others.

"If you look at the more vibrant parts of New Zealand at the moment, in regards to what's driving the economic uplift...we have turned the corner. The problem is it's taking a little bit of time to appear in the data."

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Money in a cash register Reuben Smith/NZBS

For young people, the job market is tricky too. For people aged 20-24, 10.7 percent were jobless. That equates to 27,900 young people struggling to find work and is 5,900 more than last year.

"The lack of jobs is being felt a lot harder by younger people who often don't have as much experience or skills as older people in the workforce, and so as the sort of job slack has continued to emerge…young people have definitely been hit the most," said Olsen.

"You've seen that in terms of jobs dropping away, you've seen that in terms of a higher unemployment rate."

The Reserve Bank also released its Financial Stability Report this morning, with Governor Christian Hawkesby citing continuing risks for those out of work.

"Underperformance in parts of the New Zealand economy, such as retail and hospitality, is creating challenging conditions for households and businesses."

Bagrie says it's what you get when interest rates go up.

"The Reserve Bank took interest rates up. When you take interest rates up, you beat up what's called the 'interest sensitive parts of the economy'. So that hits retailing, that hits construction."

The data today also showed all wage rates up 2.1 per cent. The average weekly earnings for full-time employees was up $67 since last year, sitting at $1,688.