New Zealand’s jobless rate unexpectedly rose in the fourth quarter, even as the participation rate climbed to an all time high, as employment lagged behind the record number of people entering the workforce.

The unemployment rate rose to 5.7 percent in the fourth quarter, from 5.4 percent three months earlier, according to Statistics New Zealand. The participation rate rose to 69.7 percent, the highest since the series began in March 1986. Economists had expected the jobless rate to fall to 5.3 percent, according to a Reuters survey, with a participation rate of 69.2 percent.

The New Zealand dollar dropped to 73.42 US cents from 73.82 cents immediately before the 10:45am release, and was recently trading at 73.60 cents.

Strength in the labour market hasn’t translated into accelerating wage inflation. Ordinary time private sector wages rose 0.5 percent in the fourth quarter, unchanged from the third quarter pace, while wages rose 1.9 percent on the year, up from a 1.8 percent pace three months earlier. The data comes after the Reserve Bank changed monetary policy to neutral last week, noting inflation may weaken further.

“Despite our expectations that the domestic economy and labour demand will continue growing at a firm pace over the coming year, we still think that any material lift in nominal wage inflation is quite some way off,” Satish Ranchod, an economist at Westpac Banking Corp, said in a preview of the data.

Employment rose 1.2 percent in the latest quarter, for an annual gain of 3.5 percent.