{"id":413757,"date":"2026-05-06T01:23:11","date_gmt":"2026-05-06T01:23:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/413757\/"},"modified":"2026-05-06T01:23:11","modified_gmt":"2026-05-06T01:23:11","slug":"unemployment-rate-falls-despite-initial-impact-of-the-oil-shock","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/413757\/","title":{"rendered":"Unemployment rate falls despite initial impact of the oil shock"},"content":{"rendered":"\u201cWe felt that the jump in the participation rate in the previous quarter was overstated, having been concentrated among young people during the school holidays, and would unwind this time.\u201d<\/p>\n
\u201cThat did happen to some degree, but was balanced out by stronger employment among older groups than we expected.\u201d<\/p>\n
The underutilisation rate remained the same at 12.9%. There were 406,000 underutilised people in the March 2026 quarter.<\/p>\n
Underutilisation is a broader measure of untapped labour market capacity than unemployment. It includes unemployed people, the potential labour force, and people who are underemployed.<\/p>\n
The Labour Cost Index (LCI) showed all salary and wage rates (including overtime) increased 2% in the year ended March 2026, while the unadjusted LCI increased 3.1%.<\/p>\n
Private sector wages increased 2% over the year. Public sector wages increased 1.7% over the year.<\/p>\n
Kiwibank economist Alexandra Turcu said the data showed an economy that was still under pressure, even before the war and oil shock<\/p>\n
\u201cThere\u2019s still a lot of slack in the labour market. With demand already weak, higher prices are unlikely to translate into stronger wage growth, reducing the risk of domestically driven inflation,\u201d he said.<\/p>\n
\u201cWe think today\u2019s data reinforces the view that there is little case for [official cash rate] hikes in the near term.\u201d<\/p>\n
The urban hubs remained under pressure \u2013 with Wellington and Auckland\u2019s unemployment rates increasing to 6.4% and 6.6% (non-, respectively, said ASB\u2019s Wesley Tanuvasa.<\/p>\n
\u201cThis is consistent with our view that while the economic recovery was underway, it was multi-speeded. Labour market slack looks to have remained in the NZ economy, although the direction of travel was upwards.\u201d<\/p>\n
Youth unemployment remained elevated at 24.9% for those aged 15-19 and 12.2% for those aged 20-24 years.<\/p>\n
The proportion of youth aged 15 to 24 who are not in employment, education, or training (the Neet rate) was 14.4% in the March 2026 quarter, compared with 13.3% in the December 2025 quarter.<\/p>\n
That suggests those leaving school or university are finding ot tougher to get work.<\/p>\n
Earlier<\/p>\n
There was unanimous agreement among economists that the full impact of the oil shock is yet to be felt in the labour market.<\/p>\n
The first quarter data captures just one month of post-war economic activity.<\/p>\n
\u201cThe fast-moving developments in the Middle East mean that the labour market surveys will already be somewhat dated on their release,\u201d Westpac\u2019s Gordon said.<\/p>\n
ASB\u2019s Tanuvasa noted the Middle East conflict presented challenges to the labour market outlook.<\/p>\n
\u201cWe do not envisage a labour market recovery unfolding until 2027 and cite heightened stagflationary risks over 2026 given higher near-term unemployment and higher near-term inflation in our projections.\u201d<\/p>\n
Despite the war and oil shock, there was scope for economic growth this year, BNZ head of research Stephen Toplis said.<\/p>\n
Economic growth has struggled for the best part of the past two years. The oil price shock is occurring just as businesses were starting to find their feet.<\/p>\n
\u201cHeadline inflation is already above the RBNZ\u2019s 1-3% target band and expected to go much higher,\u201d he said.<\/p>\n
\u201cNonetheless, while any current forecast has a wide error band around it, we remain relatively confident that the New Zealand economy will still eke out some growth this year.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cWe felt that the jump in the participation rate in the previous quarter was overstated, having been concentrated…\n","protected":false},"author":2,"featured_media":413758,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,127,219,15248,13989,30271,1888,23500,79225,111,139,69,1118,4156,13420,19257,13744,1305,13421,223,241,379],"class_list":["post-413757","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-despite","tag-economy","tag-falls","tag-fell","tag-figures","tag-first","tag-impact","tag-initial","tag-new-zealand","tag-newzealand","tag-nz","tag-of","tag-oil","tag-quarter","tag-rate","tag-shock","tag-show","tag-stats","tag-the","tag-unemployment","tag-year"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/413757","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=413757"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/413757\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/413758"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=413757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=413757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=413757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}