New Zealand's jobless rate rose to a near-decade high in Q2, exceeding forecasts. Westpac economists said the data is mixed for the RBNZ, with wage growth stable but labour demand soft.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
New Zealand's unemployment rate rose to 5.6% in the June quarter, the highest since September 2015 and above both market and RBNZ forecasts. The jump came as participation surged, complicating the central bank's policy outlook.
Westpac economists said the headline unemployment rate is the most reliable gauge in the survey, despite a surprisingly large 0.5% lift in employment. That increase was more than offset by a rise in the labour force participation rate from 70.4% to 70.7%. The bank noted that large co-movements in employment and participation typically signal sampling error. Other indicators painted a softer picture: the Monthly Employment Indicator showed filled jobs rising only 0.1%, while the Quarterly Employment Survey recorded a 0.4% drop in filled jobs and a 0.3% fall in hours paid.
Wage growth was a touch stronger than Westpac had assumed, but not accelerating. The Labour Cost Index showed private sector wages and salaries rising 0.7% in the quarter, leaving annual growth unchanged at 2.0%. Public sector wages rose 0.5% for the quarter and 1.7% for the year. The distribution of pay increases was unchanged from the prior quarter, with most settlements converging on the 2–3% range. More employers cited cost-of-living pressures as a reason for raising pay, but fewer cited the need to attract or retain workers. Westpac said that shift in justification points to stabilisation, not a groundswell for larger increases.
From the RBNZ's perspective, the details are mixed. The unemployment rate rose more than expected, and while the employment measures averaged out to soft growth, Westpac expects the June quarter GDP print to come in negative, partly due to seasonal distortions. Wage growth showed some passthrough from higher inflation, but labour demand overall appears weak. The data adds to the case for the RBNZ to begin cutting rates later this year, the bank said.
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