New Zealand’s jobless rate unexpectedly increased to a fresh 11-year high in the third quarter, adding to pressure on the government just three days from an election. Unemployment rose to 5.7% from 5.6% three months earlier, Statistics New Zealand said Wednesday in Wellington. That’s the highest since the third quarter of 2015 and beat economists’ estimates of 5.5%.
Employment fell 0.1% from the prior three months, as economists tipped a 0.4% increase. New Zealand’s economic recovery remains fragile as a surge in oil prices and the approaching Nov. 7 election dents business sentiment and limits hiring. Elevated levels of unemployment will be unwelcome news for the center-right coalition government as voters question its economic credentials.
The New Zealand dollar slid following the report while the yield on policy sensitive two-year notes dropped seven basis points to 3.87% as traders trimmed expectations of a year-end rate hike. Traders see the chance of a hike in December as less than 50-50, down from about a 75% probability on Tuesday, according to swaps data compiled by Bloomberg.
The ruling National Party, which has campaigned on being the better economic manager, has struggled for support in opinion polls and even with its two existing coalition partners may not be able to command a parliamentary majority. The main opposition Labour Party could form a government by working with as many as three other parties.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing