New Zealand unemployment rate drops to record low in Q3

[WELLINGTON] New Zealand's jobless rate fell to an equal record low in the third quarter, beating expectations and sending the Kiwi dollar higher as markets bet the data will prompt a further hike in interest rates later this month.

The unemployment rate fell to 3.4 per cent in the quarter ending September, Statistics New Zealand data showed, far lower than a forecast of 3.9 per cent by economists polled by Reuters.

"The strong decline in unemployment brought the rate down to New Zealand's lowest rate on record, matching December 2007, when it was also 3.4 per cent," work and wellbeing statistics senior manager Becky Collett said.

Wage growth was strong in the quarter with the private sector labour cost index (LCI) recording a 0.7 per cent lift, though just below a forecast 0.8 per cent increase.

The seasonally adjusted employment jumped 2.0 per cent in the quarter, beating forecasts of a 0.4 per cent increase. The participation rate rose to 71.2 per cent, higher than the 70.6 per cent forecast.

The New Zealand dollar rose more than 0.2 per cent after the data to top US$0.7125, as markets forecast the tightening labour market would force another interest rate hike this month.

The Reserve Bank of New Zealand (RBNZ) will meet on Nov 24 to review monetary policy settings after hiking rates for the first time in seven years last month.

"With underlying inflation also above the RBNZ's target in Q3, today's data raise the risk of a 50 basis point rate hike by the RBNZ in November," said Ben Udy, economist at from Capital Economics.

REUTERS