- Unemployment has risen to 4.8 percent up from 4.6 percent
- Increasing numbers of people have left the workforce
- Annual wage growth is at 3.8 percent
- The unemployment rate is slightly below financial market expectations
Unemployment has risen to a near four-year high as businesses shed staff and people stop looking for work.
Stats NZ numbers, released on Wednesday, show the annual unemployment rate for the three months ended September rose to 4.8 percent, from 4.6 percent in the previous quarter.
The rate is slightly below financial market expectations and is the highest since December 2020.
But, it is below the Reserve Bank's expectations, which were for a 5 percent rate.
The increase in unemployment has been fuelled by reduced demand for workers and as migration surged to fill previous shortages in the labour market.
"While net employment remained stable, there were changes in who was employed last year, as 45,700 people who had been employed became jobless," Stats NZ labour market manager Deb Brunning said.
The level of underutilisation, a measure of slack in the jobs market, eased marginally to 11.6 percent.
There was an increase of 57,000 in those leaving the labour force, which was variously explained as more studying, disability, retirement, and being discouraged from seeking a job.
"Some of the largest increases for those not in the labour force over the year came from people mainly engaged in leisure activities, studying or training, and taking care of themselves due their own sickness, illness, or disability," Brunning said.
Wages growth over the year slowed to 3.8 percent from 4.3 percent.
Private sector wages rose 3.3 percent annually, the lowest in nearly four years, but public sector wages were up 5.6 percent, reflecting pay settlements such as the recent police deal.
It comes after a Reserve Bank (RBNZ) report said rising unemployment was affecting more households, making it more difficult to service loans and causing higher levels of bad debt.
"Banks have reported to us that many highly indebted households have little incomes or savings buffers available. This makes them vulnerable to unanticipated costs or losses of income."
Weaker labour market
ASB senior economist Mark Smith said the data was a mixed bag, but clearly pointed to the impact of a weaker economy.
"They confirmed that the New Zealand labour market is cooling given recessionary conditions for economic activity."
He said the supply of labour had also cooled given the rapid slowdown in immigration.
"More importantly, however, the Q3 figures showed easing worker attachment to the labour force as the prospect of finding work diminishes."
Smith said the slowing in wage pressures would put further downward pressure on domestic inflation and ensure it stayed within the Reserve Bank's 1-3 percent target band.
The labour market usually lags economic trends by around six months, so further softening is to be expected to a peak of around 5.5 percent by the middle of next year.
"The RBNZ will also be wary of the wider economic, social and labour market costs from retaining overly restrictive official cash rate (OCR) settings. A frontloaded pace of policy easing remains appropriate for now, with another 50 basis point OCR cut expected in November," Smith said.
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