New Zealand's unemployment rate rose to 5.6% in the second quarter, its highest level in 11 years and above the 5.4% economists expected. Employment and wage growth both beat forecasts in the same release, complicating the read on the labour market ahead of the Reserve Bank of New Zealand's next meeting.
New Zealand's unemployment rate climbed to 5.6% in the second quarter, its highest level in 11 years. The reading topped the 5.4% economists had forecast and rose from 5.3% in the prior quarter. Yet the same release showed employment and wages growing faster than expected, muddying the signal on how much slack has built up in the labour market.
The headline jobless rate points to a labour market where job seekers are outpacing the jobs the economy is creating. But employment change for the quarter rose 0.5% quarter on quarter, far above the 0.1% expected and up from 0.2% growth previously. The participation rate also climbed, reaching 70.7% from 70.4% prior, meaning more people entered the workforce even as the jobless rate rose.
Wage growth also surprised to the upside. The Labour Costs Index rose 2.1% year on year, up from 2.0% previously. The quarterly reading came in at 0.7%, ahead of the 0.6% expected and up from 0.5% in the prior quarter. Firmer wage growth alongside a rising jobless rate gives policymakers a mixed signal, since cost pressures persist even as slack appears to be building.
New Zealand assets are likely to react primarily to the unemployment headline given its 11-year-high status, though the wage and employment beats offer some offsetting context. The data will likely factor into the Reserve Bank of New Zealand's assessment of labour market slack against persistent wage pressures as it weighs its interest rate path. The RBNZ next meets September 2.
Source: Investinglive
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