New Zealand employers unexpectedly cut payrolls for a third straight quarter, the longest slump since the 2009 global recession, sending the local currency and bond yields lower as job seekers gave up searching for work.
Employment slumped 1 percent, or 23,000 jobs, from the third quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of eight economists was for a 0.4 percent gain in employment. The jobless rate fell to 6.9 percent from 7.3 percent as the participation rate reached the lowest in about eight years.
The nation’s currency headed for its first weekly fall this year as a deteriorating labor market underscored weak domestic demand that may prompt Reserve Bank of New Zealand Governor Graeme Wheeler to extend a period of record-low borrowing costs. Last week, he said the exchange rate’s strength was affecting the nation’s exporters and manufacturers, some of which have elected to shutter plants and fire workers.
“The continued sluggish recovery of the labor market is likely to encourage the RBNZ to remain on the sidelines,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in a Feb. 5 note.
The kiwi dollar extended declines, falling as low as 83.83 U.S. cents, the least since Jan. 31, poised for its first weekly decline this year. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, fell 3 basis points to 2.90 percent.
Employment fell for three straight quarters for the first time since the January-September period in 2009, today’s report showed. From a year earlier, employment declined 1.4 percent, the first year-on-year decline since the first quarter of 2010.
The report showed the largest drop in the labor force participation rate since the series began. It slumped to 67.2 percent from 68.4 percent in the third quarter, reaching the lowest since the third quarter of 2004.
The central bank has kept borrowing costs at a record-low 2.5 percent since March 2011.
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