New Zealand jobless rate climbs to 4.6%

The news: New Zealand’s unemployment rate climbed in the June quarter as more people entered the workforce, while wage inflation showed signs of cooling.

The numbers: The unemployment rate rose to 4.6% in the second quarter, up from a revised 4.4% in the March quarter, data from Statistics New Zealand showed. Economists had forecast a 4.7% rate. Labour force participation edged higher to 71.7%, while annual wage inflation rose to 4.3%.

The context: The unemployment rate is now the highest since March 2021, with the increase fuelled by cooling demand for workers and as migration surged to fill previous shortages in the labour market. It follows a ramp up in interest rates by the Reserve Bank of New Zealand to control high inflation. The softening labour market conditions will be good news for the central bank. The RBNZ kept its cash interest rate at 5.5% in July but is widely expected to start cutting interest rates at its meeting next week.