NZ jobless numbers rise less than forecast

WELLINGTON: New Zealand unemployment rose less than expected at the end of last year, adding to signs that the central bank could remain cautious about cutting interest rates.

The jobless rate climbed to 4% in the fourth quarter from 3.9% in the third, Statistics New Zealand said in Wellington. Economists expected 4.3%.

Employment gained 0.4% from the previous three months, beating estimates of a 0.3% gain, while wage inflation eased.

The laboUr market is cooling as a record influx of immigrants increases the supply of workers and reduces upward pressure on wages, while high borrowing costs are damping household spending.

Reserve Bank of New Zealand policymakers said they’ve still got work to do to tame inflation, even as investors expect them to start cutting rates later this year.

“At face value, the report today reduces the chances of a near-term rate cut by the RBNZ,” said Jarrod Kerr, chief economist at Kiwibank in Auckland.

“Thoughts of cuts in May and August will likely push out to November. We’re sticking with our call for cuts commencing in November.”

The RBNZ in November signalled the risk that it could raise the official cash rate from 5.5% in 2024, and said it didn’t expect to start lowering the benchmark until 2025.

Since then, data revisions showed the economy was much weaker in 2023 than previously thought, fuelling bets on a pivot to rate cuts as soon as the second quarter.

Still, RBNZ chief economist Paul Conway last month said the bank has “a way to go” to get inflation back to the midpoint of its 1% to 3% target band.

While headline inflation was 4.7% in the fourth quarter, less than the RBNZ’s 5% projection, non-tradables inflation didn’t slow as much as the bank expected.

Ordinary time wages for non-government workers rose 3.9% from a year earlier, slowing from 4.1% pace in the previous quarter, the statistics agency said.

Central government sector ordinary time wages rose an annual 5.7%, up from 5.5% in the previous quarter, reflecting a number of pay settlements with workers including nurses and teachers earlier in the year.

Average ordinary time hourly earnings for non-government workers gained 0.5% from the previous quarter and 6.6% from a year earlier.

That’s down from a record 8.6% annual reading in the third quarter of 2022.

Annual employment growth of 2.4% was stronger than the 2.1% expected by economists but slowed from a revised 2.7% in the previous quarter. The participation rate eased to 71.9% from 72%. — Bloomberg