NZ Unemployment Hits 3-Year High as Rate Cut Expectations Rise

New Zealand's unemployment rate has hit its highest level in over three years, reaching 5.6% in the second quarter of 2024. This surpasses market expectations of a 5.4% rate and signals a weakening labour market.

The seasonally adjusted unemployment rate rose from a revised 5.1% in the first quarter of 2024, indicating a significant increase in the number of unemployed people to approximately 168,000 in the June quarter. The labour force participation rate edged down to 71.7% from 72.1%.

Economists note that the rise in unemployment is a lagging indicator, but the trend is likely to reinforce expectations of rate cuts later this year. The Reserve Bank of New Zealand has held the official cash rate at 5.5% since May 2023, and some analysts expect a move as early as August.

The higher unemployment rate reflects growing financial strain on households, with persisting cost-of-living pressures weighing on consumer confidence. Businesses, particularly in construction and manufacturing, have been reducing staff as demand weakens.