NZ's unemployment to rise despite continued hiring

The NZ unemployment rate is likely to rise to 6.2% in September as strong growth in the labour force offsets moderate growth in employment. Wage growth remains subdued, but low consumer price inflation means that households' spending power is rising at a strong pace.

Importantly, growth in employment is coming atop very strong population growth, with net immigration rising to a record high over the past year. 

"The resulting increase in the labour force means that, despite continued employment growth, it can be expected that the unemployment rate to push higher to 6.2% in September. That would be the fourth increase in the unemployment rate in as many quarters", says Westpac.

A key risk around these forecasts is what happens to labour force participation. The participation rate will push back up to 69.4% in September, just shy of the record high reached in March.