Home / Business and Economy / NZ Jobless Rate Hits Decade High, Signals Slower Rate Hikes
NZ Jobless Rate Hits Decade High, Signals Slower Rate Hikes
5 Aug
Summary
- Unemployment rate rose to 5.6% in the June quarter, the highest since 2015.
- Employment gains were outpaced by more people seeking work.
- Spare labor capacity suggests a gradual approach to interest rate hikes.
The unemployment rate in New Zealand climbed to 5.6% during the June quarter, marking its highest point since late 2015. This figure surpassed market expectations and indicates a softening in the labor market.
While employment saw some growth, the number of people actively seeking work increased more significantly. This trend, along with a rise in the underutilization rate to 13.8%, points to considerable spare capacity.
This labor market slack is expected to influence the Reserve Bank of New Zealand's monetary policy. Economists suggest it supports a gradual withdrawal of stimulus, potentially delaying further interest rate hikes beyond September.
Annual wage growth remained subdued at 2.0%, well below the inflation rate of 4.1%. This economic data is likely to reinforce the Reserve Bank's cautious approach to further rate adjustments.
Markets had been anticipating a rate hike in September, but the latest jobs data may lead to a reconsideration of aggressive monetary tightening. The kiwi dollar experienced a slight dip following the announcement.
