Wednesday, 4 February 2015

Labour Force Rorschah test

NZ's latest labour force survey numbers are really good news. Sometimes, an increasing unemployment rate is just fine. This quarter is one of those times and don't let anybody tell you different.

From today's release:


December 2014
quarter
Quarterly change
Annual change 
(000)
Percent
Employed
2,375
+1.2 
+3.5
Unemployed
  143
+5.8
 -2.6 
Filled jobs
1,800
 +0.1  
+2.5
Percent
Percentage points
Employment rate
65.7
+0.4
+1.0
Unemployment rate
  5.7
+0.3
 -0.3
Labour force participation rate
69.7
+0.7
+0.9
Level
Percent
Average ordinary time hourly earnings
$28.77
+0.5 
 +2.6 
Wage inflation (salary and
wage rates, including overtime)
1102
+0.5 
+1.8

The Labour Force Participation Rate has almost cracked 70%. Wage earnings growth is well in excess of CPI inflation. The increase in the unemployment rate coincides with a simultaneous, and bigger, increase in the employment rate: more people are being drawn into the labour force by strong employment growth. Some of those new-to-the-market or returning-to-the-market workers could take a little while to land, and so the unemployment rate is higher. 

And remember too that we're also in the midst of very high net migration to New Zealand. 

Remember: increasing unemployment rates while labour force participation is increasing even faster generally is a good sign. Decreasing unemployment rates while labour force participation is dropping hard is generally not a good sign: it means people are giving up on the idea of getting a job. 

Year-on-year, the employment rate is up a full point, the unemployment rate is down a third of a point, and LFPR is almost up a point. Smokin'.

Update: and remember too that the job vacancies index is now higher than it was in '07.

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