Key Points

The December 2011 quarter results show that:

• the unemployment rate fell from 6.6% to 6.3%, partly due to a fall in labour force participation,
• and that employment rose by 3,000 (0.1%).

Compared to a year ago, the Canterbury region experienced an 8.3% decline in employment and a 2.7% decrease in its labour force participation rate. The largest declines in employment in Canterbury over the year were in retail trade and accommodation, rental, hiring, and real estate services. Employment in the construction industry decreased by 4,000 (13.4%) in Canterbury over the year, down from a 30,200 peak in the December 2010 quarter.

What each scorecard dial shows

Labour demand dial: small increase in employment

• Employment increased by 3,000 (0.1%) over the quarter. Female employment grew by7,000 (0.7%), while male employment fell by 4,000 (0.4%).
• Actual hours worked fell by 1.4% in the December 2011 quarter. Full-time employment decreased by 13,000 (0.8%) after an increase in male full-time employment in the September 2011 quarter. Part-time employment grew by 15,000 (3.0%).
• The largest increases in annual employment were in education and training (10.8%), transport, postal and warehousing (8.8%), and financial and insurance services (5.4%). Annual employment in the construction industry decreased by 0.3% at the national level. Canterbury experienced a bigger decline in employment in construction of 4,000 (13.4%) in the same period, down from a peak of 30,200 in the December 2010 quarter.

Labour market matching dial: unemployment rate down slightly to 6.3%

• The unemployment rate fell slightly to 6.3% due to an unexpected decline in labour force participation.
• Of those unemployed, 31.8% were ‘long-term’ unemployed (unemployed for at least 6 months). The percentage of long-term unemployed has increased.
• Compared to a year ago, the unemployment rate for Maori remained unchanged at 13.4% and it increased for Pacific peoples from 13.6% to 13.8%.
• The unemployment rate for young people (15 to 24 year olds) increased from 16.2% to 16.6% over the quarter. The NEET rate (those not in employment, education or training) increased from 12.4% to 13.1% over the quarter.
• Firms may be experiencing skill shortages in some sectors. A net 19% of firms found it harder to find skilled staff in the December 2011 quarter compared to three months ago, and online skilled vacancy adverts were up 7.7% for the year to December 2011. This indicates that the labour market is recovering.

Labour supply dial: participation rate down slightly to 68.2%

• Labour force participation fell this quarter (down 0.2 percentage points to 68.2%), with a decrease for both males and females.
• Permanent and long term (PLT) migration is at a low point of the long term cycle. However, an increase in net gain is forecast for 2013. Annual net migration showed a net loss of 1,900 persons in the year to December 2011, compared with a net gain of 10,500 persons in the year to December 2010. This was mainly due to a large increase in the number of departing New Zealand citizens to Australia. The net loss of New Zealand citizens to Australia was 37,000 in the year to December 2011, compared with a loss of 21,900 in the year to December 2010.
• PLT departures from Christchurch increased following the 22 February 2011 earthquake and aftershocks. This number stood at 800 in December 2011 and has now stabilised to the same level as in the previous two months.

Labour quality dial: steady long-term increase in workforce qualification levels

• About 22.0% of the workforce held a bachelor degree in the September 2011 quarter, a slight dip compared to the June 2011 quarter.
• Over the long term, the qualification levels and skills of the New Zealand workforce continue to grow as younger cohorts of highly educated people move through the age groups.
• There was an 8.4% increase in attainment of industry training credits in 2010 compared to the previous year.

Workplace performance dial: wage growth increasing slowly from low levels

• The share of people working in skilled occupations continues at a high level, although long-term productivity growth remains low.
• Annual wage growth appears to be gradually recovering. The adjusted labour cost index (LCI) increased by 2.0% for the year to December 2011. This level is unchanged from the year to September 2011 but increased from 1.7% compared to a year ago.

Capital investment dial: steady increase in non-residential capital investment

• Fixed capital investment in non-residential fixed assets dipped during the recession, but recovered by 6.3% in the year to September 2011 (the latest data available up to September 2011). There was a minor decline (1.9%) in fixed capital investment in the September 2011 quarter compared to the June 2011 quarter.
• A strong recovery in capital investment is forecast over the following two years, which will be heavily influenced by the Canterbury rebuild.

Short-term outlook

• The statistics in the December 2011 quarter scorecard indicate a gradually improving labour market. As economic activity gathers pace over 2012/13 employment levels should increase and the unemployment rate should come down.