The jobless rate increased to 6 percent from 5 percent in the previous three months, Statistics New Zealand said in Wellington today.
Rising unemployment will curb consumer spending and adds to signs New Zealand faces a slow climb out of recession over the coming year. Reserve Bank Governor Alan Bollard last week said the economy’s recovery will be patchy” and he pledged to keep borrowing costs at a record low until late 2010.
Employment dropped 0.4 percent or about 10,000 jobs in the second quarter, the statistics agency said. Economists expected employers would shed 10,900 workers. Employment shrank 0.9 percent from a year earlier.
Unemployment rose 24,000 from the first quarter to a 10- year high of 138,000.
The jobless rate rose by the most in 20 years to the highest level since the third quarter of 2000, the statistics agency said. Doyle expected a rate of 5.8 percent and forecasts it will reach at least 7 percent within 12 months.
New Zealand companies began responding last year to a global credit crisis and a deepening local recession by cutting investment and closing factories. Business confidence fell to a record low in the first quarter of this year and the proportion of companies likely to fire workers rose to the highest level since 1991.
The rising unemployment rate removes pressure on employers to pay higher wages and eases inflation, justifying Bollard’s decision to keep the benchmark official cash rate at a record- low of 2.5 percent.
Wages for non-government workers rose 0.3 percent in the second quarter, the smallest increase in eight years, the statistics agency said this week.
Total actual hours worked slumped 1.9 percent from the first quarter, adding to signs the economy contracted in the three months through June, today’s report showed.
Full-time employment fell by 18,000 jobs, or 1.1 percent, in the second quarter after seasonal adjustments.
Part-time employment rose by 6,000 jobs, or 1.3 percent. Statistics New Zealand adjusts the full-time and part-time employment figures separately, which means they may not add up to the total change in employment.