New Zealand jobless rate rises to four-year high after recession
The unemployment rate is the highest since the third quarter of 2020
NEW Zealand’s jobless rate rose to a four-year high at the end of last year as hiring fell in the wake of a sharp recession.
Unemployment climbed to 5.1 per cent in the fourth quarter from 4.8 per cent in the third, Statistics New Zealand said on Wednesday (Feb 5) in Wellington. Economists expected 5.1 per cent. Employment dropped 0.1 per cent from the previous three months, less than estimates of a 0.2 per cent decline, while annual wage inflation slowed for a seventh straight quarter.
New Zealand’s economy contracted 2.1 per cent in the six months to September, denting business confidence. The weakening labour market gives the Reserve Bank of New Zealand (RBNZ) scope to continue cutting interest rates, which is expected to drive a modest economic recovery this year.
The New Zealand dollar was little changed after the report, buying 56.49 US cents at 10.48 am in Wellington.
RBNZ rates
“The labour market is expected to continue to soften given a subdued outlook for economic activity and likely cost cutting by firms struggling to rebuild battered profitability,” said Mark Smith, senior economist at ASB Bank in Auckland. “A front-loaded pace of policy easing remains appropriate for now.”
The RBNZ has lowered the Official Cash Rate (OCR) by 125 basis points since it began an easing cycle in August. Policymakers have signalled they will deliver a third straight 50-point cut at their next decision on Feb 19, which would take the OCR to 3.75 per cent.
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The unemployment rate is the highest since the third quarter of 2020. The RBNZ in November forecast 5.1 per cent.
Employment fell 1.1 per cent from a year earlier, the biggest annual decline since 2009, while the participation rate eased to 71 per cent from 71.1 per cent.
New Zealand’s annual inflation rate held steady in the fourth quarter at 2.2 per cent, near the midpoint of the central bank’s 1 to 3 per cent target band. Softening wage pressures should continue to slow overall inflation.
Ordinary time wages for non-government workers rose 2.9 per cent from a year earlier, slowing from 3.4 per cent pace in the previous quarter, the statistics agency said.
Average ordinary time hourly earnings for non-government workers gained 1.3 per cent from the previous quarter and 4 per cent from a year earlier. That’s down from a record 8.6 per cent annual reading in the third quarter of 2022. BLOOMBERG
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