In a remarkable result for Labour, NZ's unemployment actually fell in the June quarter from 4.2% to 4%. This is amazing. However, numbers can lie terribly. It is worth noting that Stats NZ's definition of an unemployed person is someone who was actively seeking work recently, or due to start a new job soon.
The fuller picture factoring in other employment metrics isn't quite so rosy:
underutilisation rate rose to 12% - we have more spare capacity in the labour force.
hours worked fell a record 10.3% - broadly this will be because people were working fewer hours as a cost-cutting measure for many organisations. But hey more free time, right?
the number of people not in the labour force rose 37,000 - fewer people were actually seeking work. It looks like this is where some of the unemployment is hiding.
the number of employed people fell 11,000 - the total labour force did actually shrink.
No matter how you cut it, this is still a pretty good result given the COVID-19 environment. Even counting all of the people not in the labour force as unemployed would only increase the unemployment rate by ~1%-1.5%. The result validates Labour's decision on the wage subsidy and subsequent extension. The wage subsidy has clearly been successful at keeping people in employment. NZ has weathered the storm relatively well so far compared to our international neighbours.
It would be foolish to celebrate too soon. The economic fallout from COVID-19 is still being realised. As the wage subsidy expires and businesses realise they are carrying more people than they need, the unemployment rate will probably increase. There is also the risk of a second wave that Ashley Bloomfield highlighted today, which would be devastating. Fingers crossed we can avoid that.
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