New Zealand first-quarter jobless rate inches up but coronavirus shock to be reflected in next quarter

New Zealand’s jobless rate rose to 4.2% in the first quarter ahead of a strict lockdown that was enforced to limit the spread of the novel coronavirus, according to data released by Statistics New Zealand on Wednesday.

The headline figure was only slightly higher than a 4.0% jobless rate in the last quarter and lower than forecasts by economists polled by Reuters who predicted a 4.3% increase in the unemployment rate.

Employment rose 0.7% quarter on quarter, while private-sector wages rose 2.5% on the year.

The data reflected the state of the labour market before the five-week alert level 4 lockdown, imposed in New Zealand to stem the spread of COVID-19. The lockdown was eased on April 28 but several restrictions are still in place across the country.

The lockdown didn’t occur until the last week of March, so we’re expecting a limited impact on this month’s numbers.

New Zealand is expecting hundreds of thousands of job losses in the coming months due to the economic impact of the coronavirus pandemic.

Finance Minister Grant Robertson has said the unemployment rate could be kept below 10%, and return to 5% in 2021 with additional government support.

“Although these data paint a positive picture, the reality is that lives and livelihoods are being significantly affected by the COVID-19 crisis, and the labour market is deteriorating,”Senior Economist said.

The government will announce its annual budget next week while the Reserve Bank of New Zealand (RBNZ) sits on May 13 to decide its monetary policy.

Kendall said more fiscal initiatives can be expected at the budget and RBNZ may double its quantitative easing programme.