WELLINGTON, Feb 7 (Reuters) - New Zealand's unemployment rate pulled back from a 13-1/2 year high in the December quarter but only because of a sharp fall in the number of people looking for work.
The weak job market will enable the Reserve Bank of New Zealand to hold interest rates steady for the foreseeable future.
Employment fell by 23,000 jobs, or 1.0 percent, in the three months to Dec. 31, with the labour participation rate dropping to 67.2 percent, the lowest since September 2004, Thursday's official data showed.
That pushed the unemployment rate down to 6.9 percent from 7.3 percent in the previous quarter, which was the highest since March 1999. A Reuters poll forecast a 7.1 percent unemployment rate and jobs growth of 0.4 percent.
'This reinforces that rates are hold for a while, and makes us comfortable with our view that rates won't be going up till March next year,' said ASB Bank chief economist Nick Tuffley.
New Zealand's economy hit a soft patch in the middle of last year as it struggled to gather momentum after the global crisis, recession, and the slow pace of rebuilding after the 2011 earthquakes in Christchurch.
The New Zealand dollar initially jumped 20 points from $0.8420, but then quickly dipped to a low of to $0.8380 before settling at $0.8395. Interest rate futures rose a couple of points.
Market pricing based on overnight indexed swaps implies no chance of a rate cut next month, with 18 basis points of rate rises seen over the next 12 months.
Full time employment grew 0.4 percent during the quarter, but that was overtaken by a 6.0 percent plunge in part-time employment.
Jobs were added in the construction, retail and telecommunications sectors, offsetting losses in the agriculture, mining and manufacturing industries.
Earlier this week, wages and partial employment data showed a 0.4 percent rise in total filled jobs and a 0.6 percent rise in total paid hours in the fourth quarter, taken as indicators of a pick up in activity.
The ANZ Bank's job advertisements series rose for the first time in four months in December.
Other recent economic data has pointed to a modest improvement, with house prices hitting record levels in some cities, moderate growth in retail sales, a lift in business and consumer confidence, and increased credit demand.
The RBNZ, faced with modest growth, low inflation, and a high exchange rate, has held its cash rate at a record low 2.5 percent since April 2011, and a Reuters poll has analysts clearly picking the next move as a rise either towards the end of this year or early 2013.
(Reporting by Mantik Kusjanto; Editing by Eric Meijer) Keywords: NEWZEALAND ECONOMY/JOB
(Mantik.Kusjanto@thomsonreuters.com)(+64 4 802 7978)(Reuters Messaging: email@example.com)
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