New Zealand unemployment rate lowest since before 2008 financial crisis

06/08/2019
Zane Small

The number of New Zealanders unemployed is the lowest it's been since before the 2008 global financial crisis which caused it to skyrocket.

The unemployment rate was at 3.9 percent in June, down from 4.2 percent in March, Stats NZ reported Tuesday. It's now the lowest it's been since June 2008 when unemployment was 3.8 percent.

Labour market and household statistics senior manager Sean Broughton said the unemployment rate has "largely been tracking down" since late 2012, "towards levels seen before the global financial crisis in 2008".

Former Prime Minister Sir John Key was elected in late 2008 when a full-blown international banking crisis broke out. New Zealand's unemployment jumped over 2 percent in the space of a year as consumer confidence hit rock bottom.

In August 2008, Treasury announced New Zealand had entered into a recession. The Government at the time announced a number of policy changes, including cuts to personal income taxes and cuts to business taxes in an attempt to boost the economy.

Since 2012, Stats NZ's data shows unemployment has slowly been dropping over the years as the effects of the financial crisis eased. The economy slowly picked up, led by trade demand from Australia and China.

The latest fall in unemployment was due to 4000 fewer unemployed men, according to Stats NZ. The number of unemployed people is down 7000 on the last quarter, bringing the total number of unemployed to 109,000.

Māori unemployment is also down from 9.4 percent this time last year to 7.7 percent. The underutilisation rate of women has also dropped from 13.7 percent in the last quarter to 13 percent.

The banking sector is welcoming the news, with ASB Bank describing the labour market as "radiating some warmth" as the unemployment rate "fell to an 11-year low".

Wages are also up, and Stats NZ is attributing it to the Government raising the minimum wage in April from $16.50 per hour to $17.70 per hour.

"The impact of the minimum wage change on industry groups was most significant in retail trade (up 1.4 percent), and accommodation and food services (up 2.3 percent)."

The results come amid warnings that business confidence and consumer confidence is actually dropping. ANZ's latest business outlook report was titled "Grim".

The bank's survey found that business confidence dropped with 44 percent of respondents saying they expected business conditions to worsen in the year ahead.

ASB Bank also said while the employment data is promising, "firms are reporting acute margin pressure and employment intentions are consistent with firms cutting staff".

Prime Minister Jacinda Ardern has blamed an economic slowdown felt in New Zealand on global conditions, often pointing to Brexit and the US-China trade war.

Economist Shamubeel Eaqub told Newshub it's part of a "broader story" of the economy "slowing from a good to slow pace". But he said it's not looking like a recession.

In Parliament on Tuesday, the Prime Minister said: "New Zealand, like other countries, is not going to be immune to the impacts of the trade war that is currently underway between the US and China."

She said New Zealand need only look to the impact it's had on Singapore, whose exports plunged to a six-year low in June which has been attributed to slowing demand from China.

"We have fared relatively well to date, but of course I think we need to be mindful that diversifying both our exports and also the markets we export into is only going to build greater resilience for the New Zealand economy at times like this," Ardern said.

"This is why we've talked about the importance of things like an EU FTA [European Union Free Trade Agreement], moving on negotiations like the Pacific Alliance, and basically widening the breadth of exports."

Finance Minister Grant Robertson said: "I do not believe, in any way, that we are heading towards a recession."

He said New Zealand still has "good economic growth".

Newshub.