New Zealand Unemployment Hits Decade-High as RBNZ Considers Rate Hikes

New Zealand's jobless rate climbed to a decade-high in the June quarter, reaching 5.6% according to data from Statistics New Zealand. This marks the highest unemployment rate since late 2015 and surpasses market forecasts of 5.4%. The Reserve Bank of New Zealand has signaled more interest rate hikes are needed to remove stimulus from the economy and restrain inflation.

The sharp rise in unemployment was driven by a jump in the number of people looking for work, which outweighed gains in employment. The participation rate also rose to its highest level in over a year at 70.7%. Despite this, annual wage growth remained subdued at 2.0%, and the private sector saw a small increase to 2.1%.

Abhijit Surya, a senior APAC economist at Capital Economics, said 'All told, the June labour force survey should reinforce the RBNZ's gradual approach to withdrawing policy accommodation.' He also stated that 'we're sticking to our view that it will wait until October before hiking rates again,' despite markets expecting a 25bp hike in September.