Nov. 5 (Bloomberg) -- New Zealand’s unemployment rate rose to a nine-year high in the third quarter, a report showed today, as central bank Governor Alan Bollard said a strengthening currency will slow the nation’s recovery from a recession.

The jobless rate increased to 6.5 percent from 6 percent in the previous three months, Statistics New Zealand said in Wellington today. Companies shed twice as many workers as economists forecast and the number of people out of work climbed to a 15-year high.

Rising unemployment and a stronger currency may hamper the nation’s recovery from the worst recession in three decades. Bollard warned today the rebound will be slow and said currency traders betting New Zealand’s economy can keep pace with neighboring Australia may get it wrong.

“Financial markets treat us like Australia, but actually we are quite different,” Bollard said in an e-mailed statement, based on a speech in Auckland. “New Zealand has had a recession and the pickup is slower and more vulnerable.”

New Zealand’s dollar, which has soared 25 percent in the past six months, fell to 72.01 U.S. cents at 2:30 p.m. in Wellington from 72.60 cents immediately before the release of the jobless figures and Bollard’s comments.

Bollard last week kept the official cash rate at a record- low 2.5 percent and said he didn’t plan to increase borrowing costs until the second half of 2010.

Exports Slow

Bollard is concerned that the New Zealand currency’s gain against the U.S. dollar will curb export earnings, which make up 30 percent of the economy. New Zealand is the world’s biggest dairy exporter.

Gross domestic product expanded 0.1 percent in the second quarter after contracting for the previous five quarters amid the global downturn. Australia avoided recession.

The currency has surged as traders increased bets that Bollard will follow Reserve Bank of Australia Governor Glenn Stevens and raise interest rates.

Australia raised its benchmark interest rate by a quarter percentage point for a second straight month this week, becoming the only nation to increase borrowing costs twice this year as the global economy recovers.

Australia’s economy “looks less like New Zealand” because of its minerals boom and rapid population growth, Bollard said today. “If financial markets can’t see the differences, they will eventually lose money and it will hurt the New Zealand economy.”

Employment Falls

Employment dropped 0.8 percent, or about 17,000 jobs, in the third quarter, today’s report showed. Economists expected a 0.3 percent decline.

The number of people out of work rose by 12,000 from the second quarter to a 15-year high of 150,000. About 2.3 million of New Zealand’s 4.4 million people are in the workforce and a record number have stopped seeking jobs.

The participation rate, which measures the proportion of the working age population employed or seeking employment, fell to 68 percent from 68.4 percent in the second quarter. Analysts expected a decline to 68.2 percent.

Total actual hours worked declined for a fifth quarter, dropping 0.7 percent to the lowest level in more than four years, today’s report showed.

Finance Minister Bill English said yesterday he expects the jobless rate will rise to about 7 percent by mid-2010, less than the 8 percent peak the government estimated in its May budget.

Consumer Confidence

The Treasury Department said this week economic growth will accelerate in the second half of this year, buoyed by rising consumer and business confidence.

“The economy may be regaining forward momentum again, but this is not translating into increased labor demand as yet,” said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington.

More companies expected the economy will improve in the next six months, according to a New Zealand Institute of Economic Research Inc. survey published last month. Still, the number of firms expecting to hire workers in the fourth quarter only equaled the number planning to reduce staff, the Wellington-based institute said.

A government program to subsidize firms to operate for fewer hours and avoid firing workers may have helped curb the drop in employment. Other companies, facing a global slump in demand, have shut their factories.

Fisher & Paykel Appliances Holdings Ltd. returned its Auckland refrigerator plant to 40-hour-a-week production in July after scaling it back to 35 hours in April. The company said the government subsidies kept the factory open, saving 60 jobs.

Bridgestone Corp., the world’s largest tiremaker by sales, said on Oct. 23 it will close a plant at Christchurch, firing 275 workers.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

Last Updated: November 4, 2009 21:17 EST