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(Bloomberg) — 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.
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Unemployment increased to 5.6% from a revised 5.4% three months earlier, Statistics New Zealand said Wednesday in Wellington. That’s the highest level since the third quarter of 2015 and exceeded economists’ median estimate of 5.4%. Employment rose 0.5% from the prior three months, outpacing the 0.1% estimate.
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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.
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The New Zealand dollar fell after the report, buying 58.89 US cents at 10:55 a.m. in Wellington.
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The jobs report will be unwelcome news for the center-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.
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The RBNZ increased the Official Cash Rate to 2.5% in July and said a further reduction in stimulus is likely. Investors are wagering the benchmark will rise to 3% by the end of the year.
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Employment rose 1.2% from the year-earlier quarter versus economists’ estimated 0.7% increase, the data showed.
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The labor force participation rate, which measures how much of the working-age population is actively seeking employment, unexpectedly climbed to 70.7% from 70.4%. Economists expected 70.4%.
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The report showed annual wage inflation accelerated for the first time in three years. Ordinary time wages for non-government workers gained 2.1% from a year earlier, rising from a 2% pace in the first quarter.
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