New Zealand Unemployment Rate Hits 5.6% Amidst Ongoing Economic Weakness

New Zealand's labour market is showing signs of weakness, despite some green shoots. The unemployment rate rose to 5.6% in June, exceeding expectations and marking a significant increase from last year's recession.

The job market usually lags behind other economic indicators by 6-9 months, but the latest data suggests that the worst of last year's downturn is still affecting the economy. The underutilisation rate spiked to its highest level in 12 years at 13.8%, implying that many workers are struggling to get enough hours or earn sufficient wages.

The cost of living continues to outpace wage growth, with inflation rising 4.1% over the same period while wages remained stagnant at 2%. This means Kiwi households continue to be worse off in real terms.