New Zealand jobless rate holds steady as fewer people seek work
The country’s economy is slowly recovering from a deep recession last year just as US President Donald Trump’s tariffs cloud the outlook for global growth
[WELLINGTON] New Zealand’s jobless rate unexpectedly held steady in the first quarter as fewer people sought work in a sluggish economy.
Unemployment was unchanged from the fourth quarter at 5.1 per cent, Statistics New Zealand said on Wednesday (May 7) in Wellington. Economists and the Reserve Bank of New Zealand (RBNZ) expected an increase to 5.3 per cent. Employment rose 0.1 per cent from the previous three months, matching estimates, while wage inflation slowed.
New Zealand’s economy is slowly recovering from a deep recession last year just as US President Donald Trump’s tariffs cloud the outlook for global growth. Business confidence has dipped and hiring intentions have retreated amid the uncertainty, dashing hopes for a strong domestic expansion and job creation.
“We look to be close to the cyclical peak in unemployment but will need to see the tentative New Zealand economic recovery become more established so that firms have the rationale and confidence to increase hiring,” said Mark Smith, senior economist at ASB Bank in Auckland. “Further monetary easing looks appropriate to support the labour market.”
The New Zealand dollar was little changed after the report, buying 60.12 US cents at 11.15 am in Wellington.
This month’s budget will show slower economic growth than previously expected both this year and next, Finance Minister Nicola Willis said last week. Expectations of a tepid recovery and signs of slowing wage inflation are fanning bets the RBNZ will cut interest rates further than it signalled in February.
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The RBNZ has lowered the Official Cash Rate (OCR) by 200 basis points to 3.5 per cent since it began an easing cycle in August and investors expect the benchmark will drop to 2.75 per cent by the end of the year, according to swaps data. Policymakers next review the OCR on May 28.
Participation
The labour force participation rate, which measures how many of the working age population are actively seeking employment, dropped to 70.8 per cent, the lowest since mid-2021.
Employment fell 0.7 per cent from the year-earlier quarter.
Today’s report also showed pressure on wages is easing as the labour market weakens, with annual wage inflation slowing for an eighth straight quarter.
Ordinary time wages for non-government workers rose 0.4 per cent from the previous quarter – the smallest gain since early 2021 – and gained 2.5 per cent from a year earlier, slowing from 2.9 per cent pace in the previous quarter.
Average ordinary time hourly earnings for non-government workers gained 0.2 per cent from the previous quarter and 3.8 per cent from a year earlier. BLOOMBERG
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