By James Glynn
SYDNEY--New Zealand unemployment rate jumped sharply in the first three months of this year as the economy slumbered in an extended recession and high interest rates continued to batter household budgets.
The seasonally adjusted unemployment rate was 4.3% in the first quarter, well up from 4.0% in the prior quarter, Stats NZ said Wednesday. Over the year to the first quarter, the unemployment rate rose 0.9 percentage points.
The rise in the jobless rate will likely challenge the Reserve Bank of New Zealand's recent messaging that interest rates will need to remain high for an extended period to cool inflation.
The central bank left the official cash rate at 5.5% at its last policy meeting in April and indicated it wasn't comfortable with the inflation outlook.
The farm-rich economy remains in recession amid mounting evidence that elevated interest rates are causing growing financial stress.
The underutilization rate -- a broader measure of spare labor capacity than unemployment alone -- was 11.2% in the first quarter. This compared with 10.7% in the fourth quarter, and 9.1% a year ago.
Increasing unemployment and underutilization among young people aged 15 to 24 years comprised over half the national increase in each of these measures of spare labor capacity, the data showed.
Annually, the number of youth aged 15 to 24 years in employment fell by 24,900 to 381,800.
The labor cost index for salary and wage rates increased 4.1% in the year to the first quarter, according to the data.
Write to James Glynn at James.Glynn@wsj.com
(END) Dow Jones Newswires
04-30-24 1930ET
