• Seasonally adjusted employment up 4,000 for the quarter and 35,000 for the year
• Seasonally adjusted unemployment down 7,000 for the quarter and 6,000 for the year
• Seasonally adjusted labour force down 3,000 for the quarter but up 28,000 for the year
• Seasonally adjusted unemployment rate down to 6.3%. Was 6.7% a year ago.
• Under 20s unemployment rate up from 23.4% to 24.2%
• Of 34 OECD countries, NZ unemployment rate is 12th lowest

• 22,000 new jobs seasonally adjusted
• 10,000 of the jobs are FT and 13,000 PT
• 10,000 fewer unemployed
• 5,000 re-enter the labour force
• The number of under 20s in employment continues to decline – has shrunk 15,000 in nine months. This is a result of the stupidity of abolishing the youth minimum wage in 2008. By contrast those aged 20 – 24 have increased by5,000 in the same period.
• Unemployment in Wellington down to 4.8% despite downsizing public service
• Job growth is in agriculture, mining, manufacturing, utilities, retail, transport and ICT. Big drop in construction.
• NZ is ranked 11th out of 33 OECD countries for lowest unemployment rate. The OECD average is 8.5%

So most of the stats are moving the right way, but the under 20s continue to be priced out of employment.

Always important to look beyond the headlines, to see what makes this up:

• Employment up 22,000 from 2,155,000 to 2,177,000
• FT employment up 26,000 and PT employment down 3,000
• Unemployment down 25,000 from 165,000 to 140,000
• Labour force shrinks by 3,000 but participation rate constant at 68.1%
• Unemployment rate goes from 7.1% to 6.0%
• Maori unemployment drops from 15.4% to 14.2%
• The jobless (includes those not looking or available for work) drops from 275,900 to 263,000
• The number of hours worked in the quarter up 1.7% seasonally adjusted which is 2nd largest quarterly growth since Dec 2004
• Underemployment (those wanting more hours) drops from 114,600 to 99,900

These can only be regarded as very good numbers. The fact it is FT job growth that has driven the drop is especially welcome. In fact checking through the HLFS data series, the increase in FT employment of 26,000 is the greatest (seasonally adjusted) quarterly increase in its history (started 1986).

Furthermore, the drop in both the number unemployed (25,000) and the unemployment rate (1.1%) are also both the greatest falls in the history of the HLFS.

I note youth unemployment remains very high at 25.2% for under 20 year olds. Again – the abolishment of youth rates has priced many teenagers out of jobs.

Now the HLFS is just a survey. A large one of 30,000 so with a small margin of error. It is quite possible this result is slightly exaggerated, and this may correct itself in June. But even with that in mind, it is still obviously a very good result.

Looking at the regional results, the rural regions seem to be doing best, but the industry results show the largest increase in employment has been in manufacturing, followed by wholesale trade.

A very good result as I say, but still a lot more work to be done. And let us remember that the Government can do its part to to help (or hinder) but primarily it is private sector employers who are responsible – they are the ones making the decisions to take on more staff, as they can afford to.

The worse case scenario is that we are barely out of recession at 0.2% quarterly growth, and unemployment may rise more in further quarters. That will add to the pressure on the Government to “create jobs”, even though in reality it is the private sector that creates job. The role of the Government is to have the economic environment optimised for job growth.

One can advocate the Government “creates” jobs by increasing spending. However when we are already borrowing $240 million a week just to keep current spending going, I don’t think greater borrowing is the answer. The answer is higher levels of economic growth.

Let’s look at the numbers for the quarter:

• Total employed dropped by 2,000
• Total unemployed increased by 18,000
• Hence labour force increased by 16,000
• Those not in labour force also increased by 4,000, so total working age population up 20,000
• Unemployment rate up 0.8%
• Under 20 unemployment rate up from 25.1% to 26.5%
• Maori unemployment rate up from 14.2% to 15.4%
• Job growth in primary production, mining, construction, wholesale trade, retail trade and IT/comms.
• Job losses in manufacturing, utilities, and transport
• Total jobless increases from 254,000 to 276,000 – this includes 86,000 not seeking work and 31,000 not available for work.
• Underemployment (those seeking more hours) drops slightly from 122,000 to 115,000.

Now I want to look specifically at youth unemployment:

This graph shows unemployment rates for the two youngest age groups. Those aged 15 to 19 and those aged 20 to 24. Traditionally the 15 to 19 year old group does have higher unemployment, reflecting their lacks of skills and experience. But the brown line shows that the gap between the two age groups averaged 6% from 1985 to when youth rates were abolished in 2008.

But currently, the gap is a whopping 14%. And I do not think it is a coincidence. Young New Zealanders have been priced off the workforce. The impact of this recession on 20 to 24 year olds is much less severe than in 1991, but the impact on under 20s is more severe.

It is also common sense. A 15 year old or even 17 year old is often not worth $12.75 an hour (let alone $15 an hour). At that age what they most value is being to have a job at all, so they gain skills and experience. This is what will help lead them (along with education) into higher paying jobs.

Abolishing the youth rates for the minimum wage is not responsible for the overall level of unemployment – that is the lack of economic growth due to the recession from Jan 2008 to Mar 2009, and the weak growth since.

But I think there is a strong case for the abolition of youth rates is responsible for why under 20s have been hit so much harder by the recession than any other age group.

• Employment drops by 24,000 jobs
• Unemployment increases by 7.000 – or from 4.7% to 5.0%
• Total Labour force drops 17,000

The revised figures for 2008 have unemployment increasing from 3.5% to 4.7% in that calendar year.

20 – 24 year olds especially hard hit with their unemployment rate going from 7.3% to 12.0% – some of that may be seasonal though. 25 – 29 year old unemployment only went from 4.6% to 4.8%.

Employment changes by sector is interesting:

• Ag/Forest/Fish up 800
• Manufacturing down 6,700
• Construction up 2,700
• Wholesale/Retail down 31,400
• Health/Comm up 8,200

One bright spot is number of hours worked did not fall – rose from 73,261 to 73,424. This may be reflected by the fact only 11,000 FT jobs were lost while 16,000 PT jobs went.

Another rare bright spot is our OECD ranking moves from 10= to 9. We are now better off (less worse really) than Australia and Luxembourg. It is worth reflecting that 5.0% is a lot better than OECD average of 7.3% or the US at 8.5%.

• Total employment up 20,000 being 12,000 men and 8,000 women
• Total unemployment up 11,000 being 3,000 men and 6,000 women (is rounded)
• Total labour force up 31,000 being 16,000 more men and 15,000 more women.
• So around equal numbers of men and women have entered the labour force, but more men have found jobs, hence male unemployment rises only 0.2% and female unemployment 0.6%
• Number of weekly hours worked dropped 1,390,000 – equal to 35,000 FTEs
• Underemployment (those employed but wanting more hours) rose from 81,000 to 97,000
• NZ’s unemployment rate of 4.6% is 10th= in OECD of 27. In 2005 we were 1st.

The trend towards more people working less hours is good, in terms of spreading the pain around. And also good more people seeking work. But the drop off in hours worked is scary – equal to 35,000 less people in work – in just one quarter.

The number of people in the labour force and employed also increased. I am not surprised as I thought the fall in the last quarter of 28,000 was too extreme, and that rebounded this quarter.So the economy may not be as weak as some have thought.

The Herald quotes her as saying:

“Compared to 12 months ago, the employment levels are 0.2 percent below that level. So this is not a dramatic change if you look at the overall picture ,” she said.

“I don’t think that this is bad news at all actually, the fact we’ve got 350,000 more jobs than we had when we were elected (1999) to lead the Government should be very good news for New Zealand.”

This is why Governments get thrown out as they stay in office too long. No Minister should ever say that losing 29,000 jobs is not bad news. It is arrogant, uncaring and out of touch.

The comparison to a year ago is somewhat misleading. The fact is the drop of 29,000 in a quarter is the biggest drop since 1989. It has wiped out all the growth from the previous three quarters, and more. It is a 1.3% drop in just one quarter.

Normally over a year one has employment growth of close to 2%, so a 0.2% decline over the year is significant.

Dyson should have talked about the challenges of global turbulence etc, rather than pretended there was no problem at all and that 29,000 less jobs is “not bad news at all actually”.

Now Labour in the 1990s tried to blame all of that downturn on the then National Government. I prefer a more rational analysis, and both National in 1997 and Labour in 2008 can’t be primarily blamed for what is essentially a global problem. However both Governments do have responsibility to have the economy as free and resilient as possible to mitigate the effects of global events.

So what has happened in the last quarter:

• Those in employment have dropped on a seasonally adjusted basis by 29,000, wiping out the gains since December 2006
• The number of people unemployed rose by 4,000 – a 5.2% increase from 77,000 to 81,000
• The number of people not in the labour force increased by 35,000 – so these are people no longer looking or available for jobs. The labour force participation rate has dropped to 67.7% – at least a two year low.
• Most of the fall in employment has been amongst under 25s
• Unemployment rates (non seasonally adjusted) by ethnicity are Europeans up from 2.2% to 3.0%, Maori from 7.2% to 8.6%, and Pacific from 4.8% to 8.2%
• Wellington appears to have the largest rise in unemployment – from 2.5% to 5.0%
• The total number of jobless people (this includes those not available or looking for work) rose from 145,900 to 181,800
• The number of actual hours worked in the quarter is the lowest since March 2005

Now I think the HLFS has exaggerated the decline somewhat. The HLFS is basically just a big opinion poll. It has a large sample (17,000 off memory) but that still leaves a sampling margin of error. I don’t think there has actually been 29,000 jobs go in the last quarter. But certainly there has been some decline.

The above graph, at The Visible Hand in Economics, shows the market reaction. The concern is not over the decline, as much as the size of the decline.

The only good news is that the chance of a lowering of interest rates this year is now higher. But food and fuel inflation will still make this a risky call to make too early.