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Last Updated: Nov 2nd, 2009 - 17:32:57 |
Aug. 11 (Bloomberg) -- New Zealand's jobless rate unexpectedly declined in the second quarter as employers hired almost twice as many workers as economists expected, damping expectations the central bank may cut interest rates soon.
Companies added 11,000 jobs in the three months to June 30 and the unemployment rate fell to 3.7 percent from 3.9 percent in the first quarter, Statistics New Zealand said in Wellington today. The median forecast of 11 economists surveyed by Bloomberg News was for 6,000 extra positions and the jobless rate to be unchanged.
Central bank Governor Alan Bollard has raised interest rates seven times since January 2004 to curb inflation amid a surge in employment that fueled the biggest jump in wages on record in the year to June. New Zealand's jobless rate is the lowest of 27 economies in the Organization for Economic Cooperation and Development that use standardized rates, the statistics agency said.
``There's no chance of a rate cut,'' said Stephen Koukoulas, chief Asian economist at TD Securities Ltd. in Sydney. ``We have now had four quarters where the unemployment rate has been below 4 percent. It's extraordinary.''
The jobless rate is the second-lowest on record after the 3.6 percent rate in the fourth quarter of last year.
The New Zealand dollar surged 0.9 percent to a six-week high of 70.13 U.S. cents at 5:05 p.m. in Wellington trading from 69.55 cents before the report was released.
Rising Wages
Wages including overtime for non-government workers rose 2.6 percent in the second quarter from a year earlier, the fastest pace since the labor cost series began, according to a government report on Aug. 8.
Bollard on July 28 said current interest rates were sufficient to keep inflation between 1 percent and 3 percent, as demanded by the government. Still, nine of 13 economists surveyed after those comments expect at least a quarter point rate cut by March.
Seasonally adjusted, employment rose 3 percent from a year earlier, or about 61,000 jobs. Analysts expected a 2.9 percent annual increase. Employment rose 0.5 percent in the quarter.
About 46 percent of New Zealand companies said it was harder to find skilled workers than three months ago, according to a second-quarter survey by the New Zealand Institute of Economic Research. A quarter of companies said a shortage of labor was preventing them expanding production.
Construction
Fletcher Building Ltd., the nation's biggest construction company, has had to turn down projects even after hiring about 150 engineers from overseas in the last three years to supplement its workforce, Chief Executive Ralph Waters said yesterday.
``We have jobs that people are extremely keen for us to do, but we are continuing to disappoint these customers because we do not have the resources,'' he told reporters.
The shortage of workers is driving up wages and costs, Waters said. ``It's certainly flowed through into much higher salaries in the construction market. If you don't want to lose them, you've got to pay them some more money.''
A report tomorrow will probably show retail sales increased 0.7 percent in the second quarter, the slowest pace in 2 1/2 years, according to the median forecast of 12 economists surveyed by Bloomberg News. Consumer spending makes up 60 percent of the economy.
Economic growth will probably slow to 2.3 percent this year from 4.8 percent in 2004, according to the median estimate of 11 economists surveyed last month.
Total actual hours worked increased 2.9 percent from the first quarter, the statistics agency said.
Full-Time Workers
Full-time employment rose 0.8 percent, or 12,000 jobs, from the previous quarter and gained 3.4 percent from a year earlier. Part-time employment declined 0.1 percent on the quarter and was 2 percent higher than a year earlier.
The participation rate, which measures the proportion of the population working or seeking employment, rose to 67.7 percent from 67.6 percent in the first quarter. The number of people working or seeking work rose by 6,000 while the population able to work increased by 8,400, the agency said.
To contact the reporter on this story:
Tracy Withers in Wellington, New Zealand at twithers@bloomberg.net.
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