NZ Unemployment Rate Surges to Decade-High, Weakening Case for Aggressive Hikes

New Zealand's labor market is showing signs of weakness, as evidenced by the country's unemployment rate climbing to its highest level in over a decade. The jobless rate rose to 5.6% in the June quarter, surpassing expectations and even the Reserve Bank of New Zealand (RBNZ) forecasts. This significant increase makes it less likely for the RBNZ to implement aggressive interest rate hikes.

The underutilisation rate also saw a notable rise, reaching 13.8%, which includes not only the unemployed but also those who want more hours or are available for work. The employment rate remained steady at 66.7%. In terms of salary and wage growth, all rates increased by just 2% in the year ended June.