WELLINGTON: New Zealand unemployment fell more than expected to its lowest in five years on modest job growth in the second quarter, while wage pressures nudged up, although the central bank still has breathing space to stay on hold for the time being.
The jobless rate fell to 5.6 percent in the three months to June 30 from a downwardly revised 5.9 percent, as employment grew 0.4 percent or 10,000 jobs, Statistics New Zealand said on Wednesday.
Economists polled by Reuters forecast unemployment falling to 5.8 percent, with employment growth of 0.7 percent, although the participation rate fell as the working age population grew.
Wages data released at the same time showed private sector wages rose 0.6 percent in the second quarter, for an annual rate of 1.8 percent, above expectations of 0.4 percent quarterly shift.
The reports were a mixed bag pointing to steady growth in the labour market, while labour cost pressures perked up, in part because of a rise in the legal mininum wage.
"There is little in today's data to change our view that the RBNZ will pause for the remainder of 2014, with a modest degree of OCR (overnight cash rate) lifts beyond then," said ANZ senior economist Mark Smith.
The Reserve Bank of New Zealand last month lifted its cash rate to 3.5 percent, the fourth rise since March, but signalled a halt amid benign inflation, a high currency, and falling commodity prices.
A Reuters poll of 14 economists showed eight expect the RBNZ to raise rates to 3.75 percent in December, with most others looking to the first quarter of 2015.
The New Zealand dollar initially picked up slightly but then eased to settle around $0.8440 from $0.8552 before the data.
The currency was already under pressure after a further sharp fall in dairy prices in the latest global auction.
Employment growth was strongest in the construction industry and utilities sectors, with earthquake-damaged Canterbury showing the strongest growth.
New Zealand's economy grew 3.8 percent in the year to March, on the back of strong commodity prices and the rebuilding of Christchurch.
But annual inflation is contained at 1.6 percent, commodity prices have eased, and the New Zealand dollar remains elevated, while strong migration gains are stoking local demand and boosting the workforce.
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