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New Zealand jobless rate steady, wages subdued
[WELLINGTON] New Zealand's strongly growing economy created 16,000 jobs in the first quarter, keeping pace with an increase in the workforce to hold the jobless rate steady, while subdued wage pressures left open the case for the central bank to consider cutting interest rates.
Employment growth was led by the technical, services and construction sectors, but the jobless rate held steady at 5.8 per cent. The participation rate rose to a record 69.6 per cent, Statistics New Zealand data showed on Wednesday.
However, previous data was revised to reflect population growth shown in the 2013 census.
Wages data released at the same time showed a 0.3 per cent lift in private sector wages over the quarter, with the annual rate holding steady at 1.8 per cent.
Economists had forecast 5.5 per cent unemployment, jobs growth of 0.8 per cent, and annual private sector wage growth of 2.0 per cent.
The size of the workforce has been boosted by record immigration gains, which along with low inflation has kept a lid on wages.
"At the margin, it does add to the case for the Reserve Bank to cut rates. That's not our call at the moment but the data add to the case for that, and the Reserve Bank will looking at these numbers closely," said Westpac economist Felix Delbruck.
Last week the bank said rate rises were not being contemplated, and it opened the door to rate cuts if demand weakens and low inflation feeds into wage and price behaviour.
A Reuters poll shows 14 of 15 economists expect New Zealand's rates will remain on hold until next year, with a clear majority favouring the second half for a first rise to 3.75 per cent.
Aukland, New Zealand's biggest city, accounted for about a half of all jobs created over the past year, while earthquake hit Canterbury accounted for about 16 per cent.
New Zealand's economy grew 3.5 per cent last year, the strongest growth in seven years, driven by housing, tourism, and manufacturing, helping to offset the slowdown in the previously surging dairy sector.
Inflation fell to a 15-year low in the first quarter because of weak price pressures, a high currency, and mixed global outlook, which has seen the RBNZ hold interest rates stable since last September.