By Mantik Kusjanto
WELLINGTON, Nov 5 (Reuters) - New Zealand's jobless rate rose more than expected to a nine-year high in the September quarter as businesses shed jobs because of recession, backing the central bank's case for keeping interest rates low into next year.
Employment fell by 0.8 percent, or 17,000 jobs, in the third quarter, sending the jobless rate to 6.5 percent, official data showed on Thursday.
The unemployment rate hit its highest since March 2000 quarter. Economists in a Reuters poll had forecast a jobless rate of 6.4 percent, and employment to fall 0.3 percent.
'The risk is that unemployment rises faster, employment losses continue, which mutes the recovery and means the Reserve Bank will be moving rates higher later rather than earlier,' said UBS senior economist Robin Clements.
The New Zealand dollar fell as much as half a cent to a low of $0.7215 before recovering to settle around $0.7235/40. Bank bill contract yields fell as investors scaled back the chances of rate rises early next year.
Last week, the Reserve Bank of New Zealand (RBNZ) held the benchmark cash rate at a record low 2.5 percent and said it expected to keep it there until the second half of 2010 to help the economy.
Recent retail sales, house sales and prices, consumer and business confidence data have pointed to a rebound in the economy, which emerged from recession in the three months to June 30 after five straight quarters of contraction.
New Zealand's unemployment rate is lower than the 8.6 percent average for member countries of the Organisation for Economic Co-operation and Development. It is well below the 9.8 percent in the United States but higher than Australia's 5.7 percent.
The jobless rate hit a 22-year low of 3.4 percent in the December 2007 quarter.
The participation rate dipped to 68.0 percent, the lowest since the March 2008 quarter, from 68.4 percent in the previous quarter.
The once-tight labour market was a key factor in the central bank lifting rates to a record high of 8.25 percent to contain inflation, before it started its easing cycle in July 2008.
The Treasury said in September the unemployment rate was likely to peak at around 7.5 percent next year, better than a previous forecast of 8 percent, while the RBNZ sees it peaking at 6.8 percent by March next year.
The quarterly labour cost and employment survey, released earlier in the week, showed wages grew at their slowest pace in eight years in the September quarter.
(Editing by Jonathan Standing)
((mantik.kusjanto@thomsonreuters.com; +64 4 471 4232; Reuters Messaging: mantik.kusjanto.reuters.com@reuters.net)) Keywords: NEWZEALAND ECONOMY/JOBS (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WELLINGTON, Nov 5 (Reuters) - New Zealand's jobless rate rose more than expected to a nine-year high in the September quarter as businesses shed jobs because of recession, backing the central bank's case for keeping interest rates low into next year.
Employment fell by 0.8 percent, or 17,000 jobs, in the third quarter, sending the jobless rate to 6.5 percent, official data showed on Thursday.
The unemployment rate hit its highest since March 2000 quarter. Economists in a Reuters poll had forecast a jobless rate of 6.4 percent, and employment to fall 0.3 percent.
'The risk is that unemployment rises faster, employment losses continue, which mutes the recovery and means the Reserve Bank will be moving rates higher later rather than earlier,' said UBS senior economist Robin Clements.
The New Zealand dollar fell as much as half a cent to a low of $0.7215 before recovering to settle around $0.7235/40. Bank bill contract yields fell as investors scaled back the chances of rate rises early next year.
Last week, the Reserve Bank of New Zealand (RBNZ) held the benchmark cash rate at a record low 2.5 percent and said it expected to keep it there until the second half of 2010 to help the economy.
Recent retail sales, house sales and prices, consumer and business confidence data have pointed to a rebound in the economy, which emerged from recession in the three months to June 30 after five straight quarters of contraction.
New Zealand's unemployment rate is lower than the 8.6 percent average for member countries of the Organisation for Economic Co-operation and Development. It is well below the 9.8 percent in the United States but higher than Australia's 5.7 percent.
The jobless rate hit a 22-year low of 3.4 percent in the December 2007 quarter.
The participation rate dipped to 68.0 percent, the lowest since the March 2008 quarter, from 68.4 percent in the previous quarter.
The once-tight labour market was a key factor in the central bank lifting rates to a record high of 8.25 percent to contain inflation, before it started its easing cycle in July 2008.
The Treasury said in September the unemployment rate was likely to peak at around 7.5 percent next year, better than a previous forecast of 8 percent, while the RBNZ sees it peaking at 6.8 percent by March next year.
The quarterly labour cost and employment survey, released earlier in the week, showed wages grew at their slowest pace in eight years in the September quarter.
(Editing by Jonathan Standing)
((mantik.kusjanto@thomsonreuters.com; +64 4 471 4232; Reuters Messaging: mantik.kusjanto.reuters.com@reuters.net)) Keywords: NEWZEALAND ECONOMY/JOBS (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.