Unemployment up, OCR cuts a way off, house building tanking

Employment growth has slowed below the pace of population growth and Kiwibank’s chief economist Jarrod Kerr says there are clear signs the RBNZ’s heavy handed OCR hikes are inhibiting household demand and hurting business.

“The labour market statistics lag activity in the economy, as employers hold onto employees for as long as they can, before downsizing. And we are hearing of businesses downsizing as the economy cools. The data will soften from here.”

Kerr says it's not just yesterday’s old data that lags the economy. It's about momentum and the outlook for employment into 2025.

“The economy is smaller than the RBNZ had forecast in November, and employment growth is likely to stall.  The unemployment rate is forecast to break above 5% this year, as employers 'rightsize' their businesses. It is by RBNZ design. And we're likely to see a softening in wage pressure and inflation.”