In Q2 2023, New Zealand's unemployment rate reached 5.2%, the highest in 15 years. A decline in economic activity and slowing wage growth exacerbate the situation in the labor market.
Increase in Unemployment and Job Shrinkage
In Q2, the unemployment rate was 5.2%, slightly above 5.1% in Q1. Although this increase was below economist expectations, it indicates further deterioration in the economic situation. Employment also shrank by 0.1% during the quarter.
Decreased Labor Market Activity
The labor force participation rate fell to 70.5%, the lowest level since early 2021. This hit particularly affected youth, especially teenagers, many of whom are opting to return to studies instead of job searching. Year-on-year, total employment fell by 0.9%, confirming a broader economic slowdown.
Slowing Wage Growth and RBNZ Expectations
A continued slowdown in wage growth adds to concerns: annual wage inflation dropped to 2.2%, indicating diminishing bargaining power for workers amid high living costs. The Reserve Bank of New Zealand is expected to soon resume cutting interest rates in light of stagnant economic growth.
The increase in unemployment and job shrinkage in New Zealand underscores the ongoing economic slowdown in the country, raising concerns among analysts and economists.
