New Zealand unemployment hits 5.7% in Q3, highest since 2015

By Lucy Craymer

WELLINGTON, Nov 4 (Reuters) - New Zealand's jobless rate rose to 5.7% in the third quarter, its highest level since 2015, while employment fell 0.1% from the previous quarter, according to data released by Statistics New Zealand on Wednesday.

• Economists polled by Reuters had forecast an unemployment rate of 5.5% and for employment to rise 0.4%. The central bank had expected the unemployment rate to be 5.5%.

• The participation rate was 70.4% in the third quarter. It was slightly lower than a forecast 70.7% participation rate.

• Wage growth slowed in the quarter with the private sector labour cost index (LCI) excluding overtime recording a 0.4% lift on the quarter versus a 07% rise in the prior quarter. It rose 2.0% on year, slower than the 2.1% increase seen in the second quarter.

• The New Zealand dollar dipped to $0.5585 following the release of the data, while 2-year swap rates are trading down 1.65% at 3.7815%.

• Last week, the central bank surprised the market by holding the cash rate steady at 2.75% citing a desire to assess the impact of two previous rate hikes. However, it signaled that further hikes remain likely.

• Kiwibank economists said in a note that the central bank’s decision to hold the cash rate feels more and more justified. “A weak labour market acts as a pressure lid on price growth… and we are seeing (it) play out in real time,” they said. Kiwibank added that as long as the cycle continues, “increasing the interest rate is not necessary.”