NZ unemployment up to 6.8%

The pick-up in unemployment, which was above RBNZ expectations, should indicate that Alan Bollard will wait for a more robust rebound in the economy before tightening monetary policy. The indications are that he will wait till September before implementing contractionary measures. Commentators are optimistic in the long-run as, eventhough the unemployment figures are disappointing, some surveys are promising:

– business and consumer surveys are solid from 2010
– expectations about hiring in the labour market are positive

What is worrying is that wage and salary inflation is on the up, with unit labour costs running near 2% per annum, and nominal rates pushing 4%. Even with this level of unemployment one wonders what is the NAIRU – the non-acclerating inflation rate of unemployment. During the upturn economists looked at 5% being the rate at which unemployment didn’t impact on prices. These figures also suggests that we have some structural unemploymnet issues and a mismatch between vacant jobs and the skills of the unemployed.

1 thought on “NZ unemployment up to 6.8%

  1. Robin Watkins

    I am amazed at the contradictions I see in the news, even in the same paper (NZ Herald) on the same day with the economic outlook in NZ. It is as though the reporters to not cross refer their information. Today, 3rd Feb. 2011 the NZ Herald was reporting a brighter outlook with the 90 day employment factor.

    The other point is how can a Tax Working Group know what figure private debt stands at. Where do they get the information from or is a lot of it made up for political reasons. Is it a bit like the Alcohol Units per week; which was made up and confessed to on UK television by a doctor. Are these ‘working groups’ necessary or just a political tool.

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