New Zealand strong jobs data puts rate hike in focus

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WELLINGTON — New Zealand’s jobless rate

fell more than expected in the second quarter, sending the kiwi

dollar up as markets saw the upbeat data as a further sign that

monetary policy will be tightened this month.

Data released by Statistics New Zealand on Wednesday showed

the jobless rate fell to 4.0% in the quarter ending June from

4.7% in the previous quarter, when analysts had expected it to

hold at 4.5%.

The jobs figures are back at pre-COVID levels and the lowest

since the third quarter of last year when pandemic lockdowns saw

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the unemployment rate surge to 5.3%.

The New Zealand dollar rose 0.4% on the upbeat news

to reach $0.7041.

The participation rate rose to 70.6% and the

underutilisation rate fell to 10.5%.

New Zealand’s early response to the pandemic has allowed the

economy to return to pre-pandemic normalcy, though a lack of

foreign tourists has badly hit key sectors.

New Zealand had to shut down a travel bubble with Australia

last month due to a fresh outbreak in Sydney.

The strong jobs data affirms view of economists that the

Reserve Bank of New Zealand (RBNZ) will raise interest rates

when it meets on Aug. 18.

“Today’s report all but confirms a rate hike from the RBNZ

in August. Strap yourselves in,” said Kiwibank Chief Economist

Jarrod Kerr.

(Reporting by Praveen Menon; Editing by Jacqueline Wong)