An expanding economy has kept labour demand solid, with employment increasing by 16,000 (0.7%) over the March Quarter, and 74,000 (3.2%) over the year to March.
Most of this increase is from full-time employment, with 60,000 more people employed full-time in the March Quarter than a year ago. The strengthened economy has encouraged more people to enter the labour force, both domestically and from abroad.
The labour force participation rate is at an all-time high, rising to 69.6% in the March Quarter. Migration is also at record levels, with New Zealand gaining a net 56,300 permanent and long-term migrants in the year ending March.
Labour force growth has kept the unemployment rate unchanged at 5.8% this Quarter.
Wage growth remains subdued given strong economic growth, but this comes against a backdrop of low inflation.
Wage inflation (as measured by the Labour Cost Index) has outpaced the Consumer Price Index for three and a half years.
Pleasing indicators
New Zealand experienced solid economic growth in 2014, and recent indicators suggest that this is likely to continue through the first half of 2015. Offshore risks remain, with soft growth across major economies, and weaknesses in commodity prices.
Domestic conditions GDP rose 0.8% in the December Quarter, down from 0.9% in September. The main contributor to growth was the retail trade and accommodation industry (up 2.3%, the largest Quarterly increase for this industry since the Rugby World Cup in 2011, largely due to increased spending from international tourists).
The rental, hiring and real estate industry was the second largest contributor to overall GDP growth (up 1.2%).
Increased house sales are driving growth in this sector, with real estate services up more than 20%. Manufacturing was up 1%, due to an increase in petroleum, chemical, polymer and rubber product manufacturing.
Drought conditions provided a partial counterbalance to the overall growth: activity in the utilities sector dropped 2.5% on the back of lower hydro-electricity generation and agricultural production was flat over the Quarter.
Declining Exports
Merchandise exports fell 0.6% ($70 million) in the March Quarter. This followed a 0.9% increase in the December Quarter, influenced by a drilling platform export.
Export values have been trending down over recent quarters, and have fallen 7.4% from a record high in March 2014.
Economic outlook Indicators of firm activity have fallen from the record levels recorded at the start of 2014, but remain buoyant.
The latest Quarterly Survey of Business Opinion showed that a net 20% of firms expected general business conditions to improve over the next six months, a level similar to that recorded in the September and December Quarters.
The ANZ Business Outlook shows a similar picture, and both are pointing to increased hiring activity in 2015, especially for the construction and services industries.
Source: Ministry of Business, Innovation & Employment
