- Diane Ramsay, labour market and household statistics manager
New Zealand's unemployment rate climbed as the number of new jobs created failed to meet a growing working population driven by record migration. The jobless rate rose to a seasonally-adjusted 5.9% in the second quarter, compared with 5.8% in the three months through March, according to Statistics New Zealand. Employment increased 0.3% in the measured quarter, against economists' expectations for 0.5% jobs growth. The indicator also lagged behind the 0.7% growth of the working population for the first time since the third quarter of 2012. Job growth was strongest in the manufacturing sector, followed by construction. At the same time participation rate slid to 69.3% from a revised 69.5%. As the figures appeared to be worse than expected, they will likely to prompt the Reserve Bank of New Zealand to consider further monetary policy easing to withstand the ongoing weakness in global dairy prices, ultra-low inflation, as well as softer economic activity. Most economists predict the Official Cash Rate to fall to 2.5% by the end of the year, down from the current 3.0%.
The flood of new labour has kept wage inflation tame as more people compete for jobs, while the growing economy has been able to accept new workers. The labour cost index showed private sector ordinary time wage rates increased 0.5% in the quarter, up from a 0.3% pace in March. Annual private sector labour costs surged 1.8%.
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