New Zealand saw an unexpected rise in unemployment at the end of last year but it was mostly due to the loss of part time jobs and officials expect it to rise moderately in coming months.

The country’s labour market recovery slowed over the December quarter with the unemployment rate rising to 6.8%. Young people and those from Māori, Pacific and Asian ethnic groups are finding it the hardest to find jobs.

‘We expect moderate employment growth over the coming quarters, along with slowing migration, to push down the unemployment rate. Employment fell due to a large drop in part time employment,’ the Department of Labour said in a statement.

There was solid employment growth in manufacturing, but weak demand in finance and insurance, education and training, and the primary sector, it added.

Hours worked rose by 0.2% indicating that firms are increasing the hours of their existing staff before taking on new workers. ‘This is consistent with a continuation of the gradual economic recovery, it said.

Fewer people arriving from abroad could help the market. ‘Net migration has eased over the past few months and is well down from the highs of a year ago. Net migration had been expected to continue easing over the coming months, with increased departures to Australia and a slowdown in arrivals, but the recent severe weather events in Australia may delay some departures,’ the statement continued.

‘The fall in employment surprised most commentators, with some suggesting the economy may again be in recession. While strong vacancy growth and employment intentions paint a more positive picture, it seems likely that the pace of recovery has slowed. While we still expect the labour market to improve over the coming quarters, these conditions often produce unusual labour market patterns and we expect to see continued volatility in the data,’ it concluded.

Overseas students though are fairing well with about a third who arrive in New Zealand to study staying on afterwards and around one fifth becoming permanent residents, Immigration Minister Jonathan Coleman said.

‘Not only does New Zealand gain from the economic benefits of having them study here, many international students stay on, providing longer term benefits by contributing their skills to our workforce and economy,’ he said.

Department of Labour research shows that about 31% of fee paying international students found work after their studies and around one fifth gained permanent residence. Students from India had the highest rate of transition to work at 72%, followed by students from China at 43%.

Coleman said the Government was reviewing international student policy to help strengthen the industry which last year contributed more than $2 billion to the economy in foreign exchange. The sector also supported about 32,000 jobs, he said.

Latest enrolment figures showed an almost 5% rise in the number of international students for the first eight months of 2010 compared with the same period in 2009.