New Zealand’s unemployment remains at record low

New Zealand's unemployment data showed that the third quarter indicators remained the same. However, a wage growth took place, putting more pressure on the central bank to keep interest rates hiking. 

Statistics New Zealand estimated the country's unemployment at 3.3%, corresponding to the second quarter of 2022. The employment rate also rose by 1.3% in the third quarter, compared to the previous months. It exceeded economists' expectations. Meanwhile, the annual rate of inflation accelerated to 3.8%.

Soaring inflation is also caused by labor shortages in New Zealand. The indicators prompted the Reserve Bank (RBNZ) to raise the Official Cash Rate (OCR) to a seven-year high of 3.5%. Regulator’s last five meetings have been held under the auspices of a 50-basis-point rate hike. Another 0.75% rise is expected at the end of November. Thus, economists predict the rate could reach 5% by early 2023. 

Jarrod Kerr, lead economist at Kiwibank, said today's data continue to highlight the need for further rate hikes. The labor market is tight, exceeding the accepted position for maximum sustainable employment.

Despite the central bank missing targets for job growth and unemployment, the indicators are above the limit. Inflation stood at 7.2% in the third quarter, well above the RBNZ range of 1-3%. 

The country's monetary tightening led to the real estate price falling, undermining the confidence of businesses and consumers. The risk of recession is also growing.

A lack of migrants is considered the reason for the tight labor market. The country's borders weren’t fully opened until August, i.e. two years since the pandemic began.

Non-state workers' wages rose 3.8% from a year earlier, peaking for the first time since 1993. The current figure is up 1.1% from the second quarter, confirming analysts' forecasts. 

Today's report showed a sharp rise in employment. A number of unemployed declined, reflecting the strong demand for personnel searches.