Unemployment set to stay at near-decade high, economists say
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New details have emerged about the expected trajectory of unemployment beyond the immediate data release, with BNZ economists now forecasting unemployment will climb further to 5.8% later in the year. This represents a more pessimistic longer-term outlook than previously indicated, suggesting the labour market deterioration may be more pronounced than the modest near-term increases initially predicted.
The Institute of Economic Research's quarterly survey (QSBO) has provided fresh evidence of weakening labour market conditions, showing a notable slide in business confidence and hiring intentions. Crucially, the survey revealed that employment intentions deteriorated progressively throughout the month, with later responses showing much weaker sentiment consistent with net labour shedding. This real-time business sentiment data suggests the employment impact may be more severe than the statistical unemployment figures alone indicate.
New Zealand economists are cautiously optimistic about the labour market ahead of Wednesday's first quarter employment data release from Stats NZ. Westpac and ANZ economists predict unemployment will hold steady at 5.4%, while BNZ and ASB forecast a modest increase to 5.5%. The slight uptick, if it occurs, is expected to reflect growth in the labour force rather than significant job losses.
The projections come against a backdrop of mounting economic uncertainty, with the Iran conflict and subsequent oil price shock creating inflationary pressures across the economy. Economists warn that rising inflation combined with unemployment increases the risk of stagflation - a particularly challenging economic scenario characterised by stagnant growth alongside price rises. However, there is consensus that the full employment impact of recent oil market volatility has yet to materialise in the data, suggesting more challenging conditions may lie ahead for New Zealand's job market.
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Source Coverage
Unemployment preview: Oil shock set to test fragile jobs recovery
Economists expect unemployment to hold near 5.4% to 5.5% in the first quarter.
Read on Herald→
Unemployment set to stay at near-decade high, economists say
The unemployment rate was expected to stay unchanged at 5.4% or nudge slightly higher for the three months ended March.
Read on 1News→Unemployment set to stay at near-decade high, economists say
The Middle East conflict has dampened tentative signs of a recovery this year.
Read on RNZ→