Thanks to Eric Crampton for his coverage. Eric suggested that my slightly gloomy take on New Zealand’s 5.7% unemployment rate needs to be tempered by recognising that the labour force participation rate is rising.
Participation rates have been rising here, and in most of the OECD. New Zealand doesn’t really stand out (from memory, the increase in our unemployment rate is also middle of the pack). One caveat is that the chart shows the 15-64 participation rate. I couldn’t quickly find the quarterly OECD data for the whole 15+ population, but when I looked at it a few weeks ago New Zealand was a little further up the rankings.
Two other things struck about the data in this chart:
- the continuing very weak US participation rate. It is just one among many indicators that makes me sceptical of the Fed’s case for seriously contemplating near-term increases in the Fed funds rate.
- the participation rates for Spain and Greece. Participation rates are usually cyclically weak when unemployment is particularly high. Spain and Greece have had huge increases in their unemployment rates, so my hypothesis is that families are finding times so tough that every possible is searching for any job, however short-term or short hours, possible.