NZ unemployment hits 11-year high on mixed jobs report

Wage growth also beat expectations. The Labour Cost Index rose 2.1% year on year, up from 2.0%, while the quarterly reading came in at 0.7%, ahead of the 0.6% expected and up from 0.5% previously. Firmer wage growth alongside a rising jobless rate sends a mixed signal for the Reserve Bank of New Zealand. Cost pressures in the labour market persist while slack builds.

The headline unemployment figure carries the most weight for New Zealand asset markets given its 11-year high, with the wage and employment beats offering offsetting context. A jobless rate at that level usually argues for a looser policy stance, a backdrop that tends to weigh on the currency and short-dated yields. The strength in employment and wages cuts against that reading. The RBNZ's assessment is now split between easing pressure and lingering cost pressure as it weighs the policy path for the months ahead.