New Zealand released its Q1 labour market reports and the HLFS recorded a 1.2% q/q rise in household employment in Q1. At the same time unemployment rate rebounded in the March quarter lifting from (an upwardly revised) 5.4% to 5.7%. This was a bigger lift than the market had anticipated.
Despite this rise in unemployment, today's data is interpreted as being strong. Strength in HLFS employment was corroborated by a strong lift (1.2%) in QES full time employment. Total hours paid, grew a more measured pace, up 0.5% in the quarter.
On the other hand, the rise in unemployment simply partially unwinds a mysterious fall last quarter. It was driven by a big rebound in participation rate, which rose from 68.4% in the December quarter to 69% in the March quarter. This effectively unwinds, the fall in the participation rate over the last two quarters, but still leaves participation below the record high of 69.5% reached in December 2015.
“Overall today’s data suggests the labour market started 2016 in good health. Although firms have lingering concerns about the impact on the NZ economy of the dairy downturn, this hasn’t translated to a reduction in hiring (although it may still do so further down the track).” notes Westpat in a report.
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