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Unemployment has risen marginally, but wage growth remains solid, likely dashing hopes of interest rate cuts any time soon.
Stats NZ data showed unemployment rose to 4.0 percent in the three months ended December from 3.9 percent in the previous quarter.
The rate is the highest since mid-2021, but below financial market and Reserve Bank expectations.
“Unemployment rates have returned to 2019 levels, following recent historic lows,” Stats NZ senior manager Becky Collett said.
The surge in migration over the past year added 124,000 people to the working-age population to a record high 4.3 million.
Collett said the result was that there were more people than the jobs available.
Employment for the quarter grew 0.4 percent, about 12,000 jobs.
The underutilisation rate, a measure of slack in the jobs market rose to 10.7 percent.
The annual growth in wages, measured by the labour cost index, slowed to 3.9 percent from 4.1 percent.
Economists said the labour market was slowing but less quickly than expected.
“The lift in unemployment is just taking longer to come through. The underutilisation rate also lifted over the quarter … more people need more hours, but employers are not as keen,” Kiwibank chief economist Jarrod Kerr said.
“There is a very strong migration impact. The working age population rose [to] the most ever recorded and employment growth can’t keep up.”
ASB senior economist Mark Smith expected the data to add to the Reserve Bank’s resolve.
“The RBNZ will be wary of the risk that labour cost inflation rates remain too high to deliver sub 3 percent inflation on a sustained basis. The OCR (official cash rate) cuts that we expect to be delivered by August could be pushed back till later in 2024.”
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