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New Zealand Q2 unemployment rate unexpectedly falls

New Zealand’s unemployment rate unexpectedly fell in the second quarter, driven by a decline in the number of people looking for work amid tight coronavirus restrictions while the number hours worked plunged. The headline jobless rate fell to 4.0% from 4.2% in the last quarter, defying the expectations of economists polled by Reuters for a 5.8% increase in the unemployment rate. With the country in COVID-19 lockdown when the quarter began, fewer people who did not have a job were actively seeking work, Statistics New Zealand said in a statement. People who were not actively seeking work were not counted as unemployed, resulting in a fall in the unemployment rate, it said. But the underutilisation rate, a measure of spare capacity in the labour market, rose from 10.4% to 12.0% – the largest quarterly rise since the series began. The hours worked were down by over 10% – another record, Statistics NZ said. “Near the end of the quarter, the unemployment rate may have increased because more people sought work as New Zealand moved down the alert levels and restrictions were eased,” labour market and household statistics senior manager Sean Broughton said. Employment dropped a much smaller-than-expected 0.4% quarter-on-quarter compared with a forecast 2.0% drop. New Zealand’s government has warned that it may not be able to save thousands of jobs that will be lost in the coming months as government support such as the wage subsidy scheme ends next month. Finance Minister Grant Robertson announced a record NZ$50 billion ($30 billion) spending package in the budget in May, in an effort to create more jobs. The Reserve Bank of New Zealand (RBNZ) sits on Aug 12 to decide its monetary policy. “For the RBNZ, today’s data are miles stronger than its May forecasts, another data release that affords the Bank time in making its next move,” ASB Chief Economist Nick Tuffley said in a note.

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