NZ Q3 jobless rate falls, rate hikes loom March |
WELLINGTON, Nov 4 (Reuters) - New Zealand's unemployment rate fell more than expected in the third quarter as more jobs were created, pointing to a pick up in the economy and a resumption in interest rates rises early next year.
Official data on Thursday showed the economy added 23,000 jobs and the work force grew in the three months to September 30, sending the jobless rate to 6.4 percent from a revised 6.9 percent and below economists' forecast for 6.7 percent.
The data showed part-time employment rose 2.7 percent, overshadowing a 0.6 percent rise in full-time jobs growth.
The data contrasted with a slew of recent weak data, albeit recent surveys have shown improving hiring plans.
"I don't think it's a game-changer for the Reserve Bank, but it's a reminder we're going to see rate rises in the early part of 2011, as opposed to the middle of 2011, which is what the market was starting to lean towards," said ANZ-National Bank chief economist Cameron Bagrie.
The New Zealand dollar
The kiwi has risen earlier after the Federal Reserve began a new chapter in quantitative easing.
Last week, the Reserve Bank of New Zealand (RBNZ) left its cash rate at 3 percent and said only that further rate increases would be needed at some stage.
Financial markets have priced in little chance of a rate hike next month, with overnight indexed swaps
Markets are pricing in 79 basis points of tightening over the next 12 months, down from 81 basis points on Wednesday and up from 53 a month ago.
Economists see the next rate rise in March, with gradual rises to follow in the face of uneven recovery marked by sluggish consumption, a stagnant housing market and a soft global outlook.
The data has been volatile this year, with the jobless rate plunging in the first quarter to 6.0 percent from a 10-year high of 7.1 percent only to rebound to 6.8 percent in the second quarter, with statistical anomalies suspected as being responsible.
New Zealand's labour market has performed better than the average jobless rate of 8.5 percent in rich countries grouped under OECD, but weaker than 5.1 percent in Australia, which escaped recession because of its booming minerals sector.
The labour market is expected to gradually improve next year as the recovery gathers steam. The central bank has forecast unemployment to dip to 6.0 percent in the year to March 2011 and to 5.5 percent in March 2012.
Earlier this week, data showed wages grew modestly in the last quarter but remained muted.
Surveys last month by the NZ Institute of Economic Research and the National Bank of NZ have shown a pick up in businesses' hiring intentions improving.
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