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New Zealand unemployment rate hits nearly nine-year low in Q3

[WELLINGTON]  New Zealand’s jobless rate sank to an almost nine-year low in the third quarter, though the strong result was unlikely to alter the central bank’s determination to keep rates on hold at a record low. 

The unemployment rate dropped to 4.6 per cent, the lowest since the fourth quarter of 2008, from 4.8 per cent the previous quarter, beating analysts’ expectations of 4.7 per cent.  

That sparked a rally in the New Zealand dollar, which rose to US$0.6896 from around US$0.6852 before the data release. The unemployment rate is expected to come under increased focus after the new Labour-led government said it plans to review the central bank legislation that currently has a sole focus on inflation.  Third quarter jobs growth was 2.2 per cent, rebounding from a 0.1 per cent fall in the second quarter.  

But economists cautioned that upbeat readings were unlikely to have much impact on the Reserve Bank of New Zealand (RBNZ) when it meets to set rates on Nov 9. 

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“These figures may have been a touch stronger than the RBNZ was expecting, but the Bank will still leave interest rates on hold next week and continue to say rate hikes are a long way off,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics.  

The RBNZ has said it would keep rates on hold at a record low of 1.75 per cent, possibly for years, to boost inflation. 

Wages grew 0.7 per cent on the quarter for annual growth of 1.9 per cent, a three-year high, though the surge was largely on the back of a government regulation to increase pay for care and support workers. The participation rate grew to 71.1 per cent from 70 per cent the previous quarter.

REUTERS

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