Wellington, Feb 3 NZPA - New figures confirm jobs were hard to come by in the second half of 2010, but economists are more upbeat for this year.

Statistics New Zealand figures published today show the unemployment rate rose to 6.8 percent in the December quarter from 6.4 percent in the three months to September.

A seasonally adjusted 2.18 million people were employed in the latest quarter, down 0.5 percent from the previous quarter although 1.3 percent ahead of a year earlier when the unemployment rate had been 7 percent.

The household labour force survey also showed the seasonally adjusted number of unemployed at 158,000, up 5.1 percent on the quarter while being 2.5 percent lower than the year before.

Despite the fall in employment in the December quarter, less part time work and a rise in full time work resulted in a 0.2 percent rise in seasonally adjusted actual hours worked in the latest period from the September quarter. Annually, actual hours worked were up 2.9 percent.

ASB chief economist Nick Tuffley and economist Jane Turner said the sharp decline in December quarter employment continued a particularly choppy run of data in the household survey, and was likely to be overstating the weakness in the labour market.

"Nonetheless, it appears momentum in the labour market recovery stalled over the second half of the year, due to the patchy nature of the economic growth," the ASB economists said.

"However, there are signs of improving labour demand, particularly given the lift in hours worked over the past year. We expect jobs growth to resume over 2011 as business expansion plans start to gain momentum."

Labour market data suggested that firms remained cautious and reluctant to increase numbers amid current economic uncertainty.

The 2.9 percent annual rise in total hours worked pointed to growing labour demand, the ASB economists said.

"However, this has yet to flow through to increased jobs, with employment up just 1.3 percent on year-ago levels. It appears businesses prefer to increase existing staff workloads rather than increase the number of employees."

ANZ economist Mark Smith said today's data suggested the labour market was some way from turning the corner, which should ensure wage inflation remained contained in the near term.

He noted recent surveys of employment intentions had shown some improvement, suggesting a pick-up in employment growth was in the pipeline.

"But with average hours still low by historical standards, the recovery in labour demand is likely to be partly met by employers increasing hours of existing staff, with the upshot still being a less employment-rich recovery," Mr Smith said.

Despite that, he also said that with economic activity set to lift strongly in the second half of 2011, increasing demand for labour was expected to flow through into firming employment and a decline in the unemployment rate towards the end of the year.