New Zealand unemployment reaches 11-year high as fuel shock hits
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NEW Zealand’s jobless rate rose to an 11-year high in the second quarter as the global energy shock squeezed company profits and more people sought work.
Unemployment increased to 5.6 per cent from a revised 5.4 per cent three months earlier, Statistics New Zealand said on Wednesday (Aug 5) in Wellington.
That’s the highest level since the third quarter of 2015 and exceeded economists’ median estimate of 5.4 per cent. Employment rose 0.5 per cent from the prior three months, outpacing the 0.1 per cent estimate.
New Zealand’s economic recovery remains fragile in the face of geopolitical ructions such as the US-Iran war, which has driven up costs and eroded business confidence.
Last month, the Reserve Bank began raising interest rates to counter inflationary pressures, suggesting firms will remain cautious about future hiring in the near term.
The New Zealand dollar fell after the report, buying 58.89 US cents at 10.55 am in Wellington.
The jobs report will be unwelcome news for the centre-right coalition government which faces a general election in early November.
The ruling National Party trails in opinion polls as voters grow weary of its claims to be the superior economic manager at a time when the recovery is still struggling for traction.
The RBNZ increased the Official Cash Rate to 2.5 per cent in July and said a further reduction in stimulus is likely. Investors are wagering the benchmark will rise to 3 per cent by the end of the year.
Employment rose 1.2 per cent from the year-earlier quarter versus economists’ estimated 0.7 per cent increase, the data showed.
The labour force participation rate, which measures how much of the working-age population is actively seeking employment, unexpectedly climbed to 70.7 per cent from 70.4 per cent. Economists expected 70.4 per cent.
The report showed annual wage inflation accelerated for the first time in three years. Ordinary time wages for non-government workers gained 2.1 per cent from a year earlier, rising from a 2 per cent pace in the first quarter. BLOOMBERG
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