The seasonally adjusted unemployment rate rose to 3.9% in the June quarter from 3.7% in the March quarter, but this was largely due to an increase in the participation rate. The number of employed and the hours worked rose 1% and 2.3% respectively in the quarter, which was more than market expectations. The New Zealand dollar jumped more than half a cent to over 72 US cents after the news, which showed the New Zealand labour market was not in as much trouble as some had expected. The unemployment rate was slightly higher than expected, but that was because the participation rate was also higher than expected. The numbers employed bounced back reasonably firmly after falling in the March quarter and showed the Labour market holding up better than some had expected. This will have disappointed slightly those expecting a weak labour market would give extra encouragement to the Reserve Bank to cut the OCR again on September 11. It's too early to say if this means a rate cut is no longer expected, but this is more evidence, along with the falling New Zealand dollar, to add to the argument against a rate cut.
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