Issue No 149 June 2005

Economic and employment growth continues

Following the latest budget, Finance Minister, Dr Michael Cullen on www.beehive.govt.nz says the economy has performed strongly over recent years and that performance will continue to support high employment levels. But the Treasury's judgement is that growth will drop back from an estimated 4.2 per cent in 2004-05 to 2.3 per cent and 2.5 per cent over the next two years.

"Factors driving the projected slowdown are declining net migration, a cooling housing market, the lagged effects of the higher dollar and recent interest rate increases and an expected deterioration in the terms of trade.

"The forecasts suggest a soft landing with unemployment remaining below five per cent. But they also show the current account deficit stuck at over six per cent of GDP over the forecast horizon," Dr Cullen said.

Also on w ww.beehive.govt.nz Social Development and Employment Minister, Steve Maharey, welcomed the news that New Zealand has recorded its highest ever level of employment. The latest Household Labour Force Survey has published that 2,055,000 New Zealanders are now employed.

"While the unemployment rate has risen slightly to 3.9 per cent, the labour market remains historically strong with the third lowest unemployment rate recorded by the survey, the highest level of employment ever and full-time employment continuing on a very strong growth path," Mr Maharey said.

Mr Maharey said the increase in the unemployment rate was driven by a drop in the number of people in part-time employment, however, the unemployment rate in all regions remains below five per cent.