According to TD Securities’ Australia/NZ macro team, New Zealand's employment growth is projected to be 0.1% quarter-on-quarter in Q2, a rate considered insufficient to keep pace with population growth [1]. As a result, the unemployment rate is expected to rise to 5.4%, up from 5.3% in Q1, returning to its recent cycle high observed in Q4 2025 and aligning with the Reserve Bank of New Zealand’s (RBNZ) May forecast [1].
Despite the softening labor market, TD Securities notes that economic activity appears to have rebounded into Q3 [1]. This recovery in activity leads their analysts to anticipate another 25 basis point rate hike by the RBNZ in September [1]. The consensus for the unemployment rate is also 5.4%, matching TD Securities’ expectations [1].
No specific market reactions or immediate impacts on the New Zealand Dollar are mentioned in the article. However, the expectation of a rate hike despite rising unemployment suggests that the RBNZ remains focused on monetary tightening in response to broader economic conditions [1].
No forward-looking statements from other analysts or additional commentary on market sentiment are provided in the source [1].
CONCLUSION
TD Securities expects New Zealand's unemployment rate to rise to 5.4% in Q2, in line with RBNZ forecasts, while also predicting a 25bp rate hike in September. The combination of a soft labor market and anticipated monetary tightening signals a cautious but proactive stance from the RBNZ.