The New Zealand economy continues to push through its housing bust and economic downturn.
Yesterday, unemployment came in at 5.3% for the September quarter. The participation rate continues to fall to 70.3% as jobs become more scarce, holding down the headline unemployment rate.
As illustrated below by Justin Fabo from Antipodean Macro, the underutilisation rate also rose by 10bp to 12.9%:
This is consistent with still-weakening wage growth.
Goldman sees the RBNZ cutting two more times in the near future.
From a policy perspective, given current RBNZ estimates of a negative output gap of around 1.75% of GDP, today’s data adds to the case for clearly accommodative policy to support a strong economic recovery in 2026.
We expect the RBNZ will continue to lower the OCR by 25bp in November and February to a 2.0% terminal rate.
The New Zealand economy is in a rare double-dip recession.
As house prices keep falling, wiping out the COVID gains.
More Kiwis are certain to head across the pond for work.
