More good news: unemployment expected to be steady into 2017 election

This takes away Labour’s major policy plank and they’ll have to find another one.

Business leaders and economists are signalling there will be no drop in unemployment for the next two years.

At the start of November figures from Statistics New Zealand showed unemployment hit 6 per cent in the September quarter, the highest level in 18 months, following a surprise drop in the workforce.

On Tuesday the Reserve Bank’s quarterly survey of expectations, which gathers economic predictions from economists and business and industry leaders, showed no relief is in sight.

The survey showed participants expect unemployment to be 6.18 per cent in 12 months and 6.01 per cent in two years.  

In each of the last four surveys expectations for unemployment have been rising, with the last survey in August predicting unemployment would be about 5.8 per cent in 2016 and 2017.

ASB senior economist Chris Tennent-Brown said higher unemployment was likely to mute pressure on wages, which could keep inflation down.

“We expect more slack in the labour market to lead to subdued wage inflation pressures.”

With the economy cooling and net migration staying at record levels, some economists have warned unemployment could increase to 7 per cent over the next two years.

Labour may scream about the unemployment rate but the fact remains that we have one of the lowest unemployment rates in the OECD.

With only statistical blips on the horizon, Labour will find it difficult to make claims of a failing economy stand up.

 

– Fairfax


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