By Lucy Craymer
WELLINGTON (Reuters) -New Zealand’s jobless rate rose to 5.3% in the third quarter, its highest level since 2016, while employment was steady compared with the previous quarter, according to data released by Statistics New Zealand on Wednesday.
Ongoing weakness in New Zealand’s labour market and little wage inflation will firm the case for the central bank to cut the cash rate when it meets later in November. The New Zealand dollar hit a seven-month low of $0.5635 after the data release, before stabilising at $0.5645.
Economists polled by Reuters had forecast an unemployment rate of 5.3% and for employment to rise 0.1%. The central bank had expected the unemployment rate to be 5.3%.
The participation rate was 70.3% in the third quarter, slightly lower than a forecast 70.5%.
“The unemployment rate has been over 5% for the last four quarters,” Statistics New Zealand labour market spokesperson Jason Attewell said.
Wage growth slowed in the quarter with the private sector labour cost index (LCI) excluding overtime recording a 0.5% lift on the quarter, compared with a 0.6% increase in the prior quarter. It was stronger than the forecast 0.4% increase for the quarter.
Data showed third-quarter seasonally adjusted private sector wages increased 2.1% from the previous year.
The central bank has cut rates by 300 basis points since August 2024, and with inflation within its target band of 1% to 3%, policymakers have leeway to lower borrowing costs further. Economists expect the central bank to end its easing cycle in November with a final 25 basis point rate cut.
(Reporting by Lucy Craymer; Editing by Stephen Coates)
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