Surprise Fall in New Zealand Unemployment Rate

Trading Tips

Unemployment Rate Beats Forecasts

In a data release which has bucked the trend seen across the G10 recently, as well as confounding the New Zealand government’s own forecasts, the unemployment rate there fell back to 4% in the three months to June. Data release overnight from government agency Statistics New Zealand marked a decline in the unemployment rate from the prior month’s 4.2% with the release also coming in lower than the forecast 5.6% reading the market was looking for.

Successful Lockdown

The data is particularly surprising given that in the government’s May budget, the Treasury forecast that the unemployment rate would rise to 8.3% over the period. The decrease in joblessness likely reflects the success of the lockdown measures implemented by the government. The antipodean country was among the first to install a lockdown in March, imposing some of the strictest lockdown measures seen globally. However, since the lockdown was lifted between late April and early June the success of the measures has become clear; New Zealand has recorded no new cases of the virus over the last month, with the government declaring that there is no known community transmission of the virus there.

With the unemployment rate now having fallen back to 4%, the stats speak for themselves when compared against the 7.4% unemployment rate in neighbouring Australia and the 11.1% unemployment rate in the US.

While the headline data is certainly positive, there are some aspects of the breakdown which are worth pointing out. For example, hours worked was seen lower by 10% over the period while the underutilisation rate (which measures the spare capacity in the economy) moved from 10.4% last to 12% current.

Government Supporting Affected Workers

The New Zealand government is currently taking measures to help support those out of work with a NZD 13 billion wage subsidy scheme which is due to end in September. As part of the plan, those who are laid off as a result of the virus will receive unemployment benefits for a further 12 weeks before being moved back across the to default social welfare payment system which operates in New Zealand.

While the country continues to steer clear of avoiding the type of rise in new infections seen in neighbouring Australia, for example, the outlook for the domestic economy looks fairly robust with the recovery likely to continue gathering pace. The real key to a return to growth will be how much of a pick-up we see in global demand for the New Zealand export market which the country depends on.

Technical Views

AUDNZD (Bullish above 1.0721)

From a technical viewpoint. The rally in AUDNZD has seen price moving back above the 50dma and the 1.0721 level. While price holds above here the next test for bulls will be a challenge of the 1.0867 with the long-term bearish trend line coming in just above. If price can break above there, this could pave the way for a bigger bullish move in AUDNZD. To the downside a break of 1.0721 will turn attention back towards the 1.0550 level support.

Surprise Fall in New Zealand Unemployment Rate

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Share this post:

Let’s block ads! (Why?)


Leave a Reply

Your email address will not be published. Required fields are marked *