Business. Scoop » Weak Labour Market With A Side Of Rate Hikes
Press Release – Kiwi EconomicsLabour market data for the June quarter was both surprising and mixed. Unemployment was 5. 6%, higher than market expectations, and a significant step above our optimistic. . .
Press Release – Kiwi EconomicsLabour market data for the June quarter was both surprising and mixed. Unemployment was 5. 6%, higher than market expectations, and a significant step above our optimistic forecast of 5. 3%. Employment in New Zealand did not grow by enough to offset the increased number of workers entering the workforce. This drove the unemployment rate above expectations at 5. 6%. High underutilisation and a decline in hours worked indicates a soft labour market. The job situation in the US was also soft. A falling unemployment rate was driven by an exodus from the workforce. And the US recorded a decrease in jobs. Financial markets were spurred on by tech sector earnings and hopes of a re-opening of the Strait of Hormuz. But hopes faded by the end of last week. Oil is trading at fair prices, but remains elevated and volatile. Here’s our take on current eventsLabour market data for the June quarter was both surprising and mixed. Unemployment was 5. 6%, higher than market expectations, and a significant step above our optimistic forecast of 5. 3%. We thought the worst of last year’s recession was behind us. The labour market usually lags the rest of the economy by 6-9 months. We had some growth momentum in the second half of last year. But clearly it was not enough. We continue to expect the unemployment rate to push higher by the end of the year, when the full impact of the Middle East conflict shows up. As with any labour market data release, unemployment was the focus. But it’s more than that, it must include underemployed people. And our underutilisation rate spiked to the highest level in 12 years, at 13. 8%. That rate implies Kiwi workers are struggling to get the amount of work they want. They may have a job, but they’re not earning enough, as seen through the small decline in total hours worked across the economy. The cost of everyday goods and services continue to rise faster than wages. Wage growth was stuck at 2%. Paired with the 4. 1% inflation rate over the same period, it shows Kiwi households continue to be worse off in real terms. Although things were grim overall, there were some green shoots. Employment grew, meaning the economy was adding new jobs. It simply wasn’t enough to offset the growing labour force. The participation rate rose from 70. 4 to 70. 7%, meaning more Kiwi are looking for work. Be sure to read our take on the labour market data (https://www. kiwibank. co. nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/frosty-unemployment-bites-wage-growth-frozen-solid/) and our chart of the week. Chart of the Week: Absorbing the shock. Youth bear the brunt. Photo/SuppliedThe labour market data looks grim. A 5. 6% unemployment rate, the highest since September of 2015. And over one in six young people in the labour force were unemployed. We’re still trying to recover from a recession. We only just recorded a second consecutive quarter of growth in December of last year. The impact of the downturn is still reverberating through the economy. We’re seeing the pain of that recession in the latest labour market data. This isn’t the impact from the geopolitical conflict in the Middle East. Not yet. In this week’s chart, we highlight how economic downturns can have disproportionate effects on young people. A downturn hits young people harder and faster. The unemployment rate for young Kiwi aged 15 to 24 was 17. 2% in June. Not really backing down from the March quarter 17. 3% (a 14- year high). The next closest age group, those aged 25 to 34, have an unemployment rate of 5. 2% (a 9-year high). Historically, youth unemployment has always been elevated relative to older groups, but the current level is among the highest seen since the post-COVID recovery period. Young workers are typically concentrated in sectors such as retail, hospitality and other discretionary services, which tend to weaken early during economic downturns. Their lower levels of work experience also make them more vulnerable when hiring demand softens. Read more here – https://image. communications. kiwibank. co. nz/lib/fe3b11757764047d731670/m/1/aa3c57bd-3a90-4c20-be4f-bb5ede2d0d2f. pdfContent Sourced fromscoop. co. nzOriginal url