New Zealand Unemployment Drops to 5.1 Percent

New Zealand’s unemployment fell slightly in the second quarter of the year.

The unemployment rate dropped from 5.2 percent in the first quarter to 5.1 percent the second quarter, the Statistics New Zealand reported on Wednesday.

A total of 131,000 people were reportedly out of work, while about 12 percent of the working population is “under-utilised”, according the new data.

The number of employed people rose 2.4 percent to 2.46 million, but about 58,000 extra people added was due to changes in the new survey methodology.

Although, the Statistic New Zealand defended the changes, but economists said the data should be treated with care, even though the labour market is in good shape.

“Because of the issues with data quality, we are inclined to just look through the results of today’s survey and stick with our prior premise that the labour market is in decent shape and the unemployment rate is trending lower. Spare capacity is being absorbed, but only gradually, and that is contributing to modest wage growth,” said economists at ANZ.

“Although it is difficult to read too much into today’s numbers, the general tenor of strength is in line with surveys showing that both skilled and unskilled labour are the most difficult to find since 2007/08, when the unemployment rate was below 4 per cent,” they said.

“Continued growth in the construction and services sectors are likely to underpin further strong labour market results in coming quarters.”

“The unemployment rate is trending lower, but there is still spare capacity there that’s weighing on wage growth,” said Phil, a senior economist ANZ.

“That’s likely to be a gradual story that unwinds over the next few years as the economy still looks good.”