Weak labor data may pressure the Reserve Bank of New Zealand to consider a rate hike as unemployment rises to cycle highs.
New Zealand’s employment growth slowed to 0.1% quarter-on-quarter in Q2, falling short of population gains. The data suggests a cooling labor market, with unemployment expected to climb to 5.4%, matching its recent cycle high.
The RBNZ had previously projected a 5.4% unemployment rate in its May forecasts. Analysts note the soft print aligns with expectations of weaker economic activity, potentially reinforcing calls for tighter monetary policy.
Markets are monitoring the RBNZ’s next move, with some anticipating a hike to curb inflationary pressures despite sluggish growth.