ANZ Bank: New Zealand unemployment rate will peak at 5.6%

Economists at ANZ Bank in New Zealand and Australia have stated in their weekly report that the economic slowdown caused by the impact of rising fuel prices will delay the recovery of the labor market in New Zealand. ANZ Bank predicts that the unemployment rate in the first quarter of 2026 will rise from 5.4% in the fourth quarter of 2025 to 5.5%; they expect the unemployment rate to peak at 5.6% in the second quarter, previously expected to be 5.2%; and they predict the unemployment rate to be 5.5% in the fourth quarter, previously expected to be 4.9%. The report states that the employment growth in the first half of the year may be as low as 0.3%, far below the previous expectation of 1.1%, but the decline in labor force participation will cushion the impact on the unemployment rate indicators. Due to weakening labor demand, coupled with rising costs such as fuel squeezing business profit margins, the wage growth space is limited, and it is expected that wage growth will be slightly lower than previously expected.