New Zealand: Unemployment rate rises in Q3
Latest reading: The seasonally-adjusted unemployment rate rose to 4.8% in Q3 2024 from 4.6% in Q2 2024. Over the same time period, the underutilization rate—a broader measure of spare labor market capacity—was well in double digits at 11.6%, while private-sector wage growth slipped from 3.6% to 3.3%.
Outlook: The unemployment rate has been progressively rising over the last two years amid rapid population growth and weak economic activity. This softening labor market has been part of the Central Bank’s motivation to cut interest rates at its most recent meetings, a trend which will continue ahead. Moreover, the Q3 labor market data points to a soft private consumption outturn; our panelists see a mere 1.1% year-on-year expansion in private spending in the quarter.
Panelist insight: On the implications of the data, ANZ analysts said:
“The unemployment rate rose from 4.6% to 4.8% in Q3, lower than our forecast of 4.9% and the RBNZ’s August MPS pick of 5.0% […] Given the RBNZ’s confidence that inflation has been tamed and that an OCR above 4% is considered contractionary, we don’t view [the Q3 labor market] data as a roadblock to a 50bp cut later this month, but the marginally tighter-than-expected vibe could quiet talk of a 75bp cut.”