New Zealand Jobless Rate Rises to Five-Year-High 4.6%

Feb. 5 (Bloomberg) -- New Zealand’sjobless rate rose to a five-year high in the fourth quarter as a prolonged recession prompted companies to cut production and fire workers.

The unemployment rate increased to 4.6 percent from 4.2 percent in the previous three months, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. The forecast matched the median estimate of 10 economists surveyed by Bloomberg News.

Rising unemployment will curb consumer spending and adds to signs New Zealand’s economy is unlikely to emerge from a recession until the second half of 2009. Reserve Bank Governor Alan Bollard has slashed interest rates and the government is lowering provisional tax payments to revive business confidence after it fell to a record low last year.

“Employers aren’t looking to take people on, which suggests the unemployment rate will go higher,” said Darren Gibbs, chief New Zealand economist at Deutsche Bank AG in Auckland. “The economy is slowing. The hours worked data suggest that if people were employed they weren’t doing as much.”

New Zealand’s dollar rose to 51.02 U.S. cents at 11:45 a.m. in Wellington from 50.68 cents immediately before the report, which also showed that employment unexpectedly increased in the quarter. The yield on a three-month bank-bill futures contract maturing in March rose 9 basis points to 3.2 percent. A basis point is 0.01 percentage points.

March Review

Traders reduced bets that Bollard may cut the interest rate by as much as 100 basis points at his next review in March, Gibbs said.

Employment rose 0.9 percent, or about 21,000 jobs, in the fourth quarter, the statistics agency said. Economists expected employers would shed 15,000 jobs. Employment also gained 0.9 percent from a year earlier.

Total actual hours worked declined 1.9 percent from the third quarter, adding to signs that output from the economy slowed, the agency said.

Telecom Corp., the largest telephone company, this week said it will shift 250 call-center jobs to Manila over the next 18 months to reduce costs. Air New Zealand Ltd., the largest airlines, is firing 200 workers including long-haul cabin crew as it reduces capacity on flights to Asia amid a slump in international travel.

New Zealand’s economy began contracting in the first quarter of last year and will probably remain in recession until June 30, Bollard said last week. The government reports fourth- quarter figures for gross domestic product on March 27.

Trading Outlook

A net 43 percent of companies expected trading would slow in the first three months of 2009, the most since records began in 1970, according to a New Zealand Institute of Economic Research Inc. survey published on Jan. 13. The net figure is calculated by subtracting those reporting an increase in activity from those seeing a drop.

The same survey showed a net 32 percent of companies expect to fire workers in the next year, the most since 1991.

Prime Minister John Key last month said the jobless rate could reach 7.5 percent by mid-2010 as the economy stands still this year. The U.S. jobless rate was 7.2 percent in December; Australia’s was 4.5 percent in January.

Bollard has cut the benchmark interest rate by 4.75 percentage points since July to 3.5 percent to bolster demand. Key yesterday announced a package of business tax reforms designed to reduce the frequency with which small and medium sized companies make tax payments.

Participation rate

The number of people unemployed rose to 105,000, the highest in more than six years.

The number of people working or seeking work rose 31,000 to 2,296,000 and most of the additional people found jobs, the agency said. The number not looking for work or unavailable to work declined 19,000.

The participation rate, which measures the proportion of the population working or seeking employment, rose to a record 69.3 percent from 68.7 percent in the third quarter. Economists expected 68.4 percent.

The highest unemployment rate since December 2003, when it was also 4.6 percent, will ease pressure on wages and slow spending, justifying Bollard’s decision to cut borrowing costs.

Wages for non-government workers rose 3.2 percent last year, the slowest pace in 18 months, the statistics agency said Feb. 2.

Full-time employment gained by 6,000 jobs, or 0.3 percent, in the fourth quarter after seasonal adjustments.

Part-time employment increased by 17,000 jobs, or 3.5 percent. Statistics New Zealand adjusts the full-time and part- time employment figures separately, which means they may not add to the total change in employment.

To contact the reporter on this story: Tracy Withers in Wellington attwithers@bloomberg.net.

Last Updated: February 4, 2009 18:07 EST

New Zealand 'employment rates up'

Employment rates in New Zealand shot up by 1.2 per cent during the second financial quarter, it has been reported.

Despite forecasts to the contrary, the country's economy also saw gains in the finance and education industries.

The boost in employment meant the addition of 26,000 jobs and showed an optimistic bounce back from a 1.3 per cent drop from January to March.

Nick Tuffley, chief economist at ASB Bank said: "The figures are robust enough to have us concluding that on economic data grounds there is little to prompt the RBNZ to cut the official cash rate by 50 basis points in September."

The news comes as The New Zealand Guardian Trust announced a suspension of withdrawals and new investments in its mortgage fund last month.

Though employment rates are looking hopeful, unemployment also increased to 3.9 per cent from April to June, reaching its highest in two years.

Silver Fern layoffs good for Alliance, bad for PGG deals

By Mitchell Hall
Tuesday July 22 2008 - 12:29pm
Keith Cooper. Photo: NZPA/John McCombe

Silver Fern farms shedding potentially 250 jobs means overcapacity concerns regarding an Alliance group merger have been addressed, and the PGG Wrightsons deal looks ever more distant.

Two sheep and lamb slaughter plants in Canterbury are to be shut following an announcement this morning by Silver Fern farms.

Silver Fern Farms chief executive Keith Cooper said closure was the final instalment of its Project Rightsize for 2008, designed to align processing capacity with reduced supply.

NBR analyst Hugh Stringleman says that this means the proposed PGG Wrightson takeover looks less likely than it did initially, because “Farmers’ returns from lamb and beef are going up virtually day by day, and if Silver Fern can do all this rationalisation on its own, why does it need Pyne Gould Guinness Wrightson to assist?”

Silver Fern’s move will address previous Alliance concerns about debt, exposure and overcapacity.

“The better outcome for farmers would be to retain 100 percent cooperative ownership and do the merger with Alliance”, said Mr Stringleman.

A non cooperative investor such as Pyne Gould Guinness would have to stay under a 40 percent shareholding in order for a co-op to retain its cooperative status.

However, Mr Stringleman pointed out that if the PGG Wrightson proposal with Silver Fern went ahead - with the Alliance merger occurring afterwards, farmers would then get back up to around 75 per cent ownership, recovering cooperative status.

Alliance group has not shown any warmth at all to PGG Wrightson’s overtures though, and farmers are even less likely to be won over, with a 75 percent ‘yes’ vote required for any PGG Wrightson deal to proceed.

New Zealand's unemployment rate at 21-year low of 3.5 percent

WELLINGTON, New Zealand: New Zealand's unemployment rate fell in the third quarter to 3.5 percent — the lowest rate in the 21 years that the figure has been tracked, official data showed Thursday.

Statistics New Zealand said its Household Labor Force Survey showed that the seasonally adjusted unemployment rate fell to 3.5 percent in the three months ended Sept. 30, from 3.6 percent in the second quarter.

It was the lowest jobless rate recorded since the survey started in 1986, the state-funded bureau said.

However, the overall level of employment fell off from a record high the previous quarter.

Seasonally adjusted employment declined 0.3 percent in the third quarter, Statistics New Zealand said. The decline was led by a 0.6 percent fall in full-time jobs, dominated by a 1.2 percent fall in female employment — but part-time employment was up 1.3 percent.

On a seasonally adjusted basis 2.15 million New Zealanders had jobs in the third quarter, down 7,000 from the previous quarter, when the country had its highest level of employment since tracking of the figures started in 1986.


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