New Zealand’s unemployment rate has climbed to 5.2% in the second quarter, marking the highest level in almost five years. The rise from 5.1% in the previous quarter signals a potential economic slowdown that may lead the central bank to consider resuming interest rate cuts. Statistics New Zealand reported the figures on Wednesday in Wellington, noting the rate is the highest since the third quarter of 2020, though slightly below economists’ expectations of 5.3%.
Employment figures also reflected the cooling economy, with a 0.1% decrease from the previous three months, aligning with economists’ estimates. The New Zealand economy has faced headwinds from global trade uncertainties, particularly related to US tariff policies. These external pressures have contributed to a dip in business confidence during the second quarter.
Concerns about stalled growth are growing, with contractions observed in both the manufacturing and service industries. Furthermore, the housing market has remained sluggish, adding to the overall economic unease in New Zealand. The latest unemployment data reinforces these concerns, increasing pressure on policymakers to consider further monetary easing measures.
Despite the concerning unemployment figures, the New Zealand dollar experienced a slight increase following the report’s release. At 10.49am in Wellington, the currency rose to US59.07¢, up from US58.94¢ prior to the announcement. This rise may reflect market participants anticipating a response from the Reserve Bank of New Zealand.
