Economists predict 5.3% unemployment rate amid fragile economic recovery
The peak, which she and other economists were estimating at 5.3%, was a historically low one.
But that was 'cold comfort' for those impacted – most likely to be young people, Māori and Pasifika, Zollner said.
'It's certainly true that recessions are not felt equally.'
Westpac and ANZ economists are also picking 5.3%, the Herald reported this week.
The country's 'fragile economic recovery' was under way, ANZ senior economist Miles Workman said.
'But given the typical lags, the recovery will likely take a few quarters to be reflected in the unemployment rate.'
Other than Budget 2025, this is the last major piece of domestic data before the Reserve Bank's Monetary Policy Statement, Workman said.
'However, it's fair to say that changes to the RBNZ's economic forecasts are likely to end up more meaningful for the monetary policy outlook than starting-point news.'
Economists at ASB see the unemployment rate landing slightly lower, at 5.2% for the quarter, and in line with the Reserve Bank's most recent forecast.
It would still be the highest in just four-and-a-half years (unemployment peaked at 5.2% in late 2020 after the Covid shutdown recession).
ASB senior economist Mark Smith said he expected broadly unchanged employment levels, with modest increases in the labour force pushing the unemployment rate marginally higher.
'The unsettled and uncertain local and global scene and soft domestic demand are expected to contribute to subdued hiring over much of the year until strengthening domestic activity feeds through into more hiring.
'Low growth in the labour force will dampen the peak in the unemployment rate [in the low 5s for much of 2025], with the unemployment rate subsequently easing.'
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Heightened supply, alongside the fact net migration remains, not only weak, but also subject to continued downward revisions, points to the strong likelihood CPI rental (stock) inflation falls back towards 2% over the coming 12 months. till, one development worth highlighting is that available rental listings, according to the data we collect from Trademe, appear to have stopped rising. On our estimates, rental vacancy rates have tracked roughly sideways at 3.3% for the past two months. If sustained, this would cap a multi-year uptrend and mean rental supply capacity, while still large, is no longer expanding. 6. Runway to a sub-3% OCR looking clearer It's been relatively quiet on the interest rate front recently. There's been a pause in the trend declines in most retail interest rates (chart opposite). However, the net of recent growth and inflation goings on described above is sufficient in our view to reintroduce some gentle downward pressure, should the RBNZ resume Official Cash Rate cuts in August as we expect. A 25bps cut in August is as close to fully priced as it gets and we think the combination of sputtering demand and contained inflation supports the case for a follow up in October. That is, there's no change to our long-held forecast for a 2.75% low in the OCR cycle. At a high level we still think the risks are falling evenly either side of this view but more recently there's probably been more of a skew to the downside.
