New Zealand's unemployment rate predicted to exceed 5% by year-end

New Zealand's unemployment rate is estimated to surpass five per cent by the end of the year as labour demand weakens, according to ANZ.

ANZ, in its weekly data wrap in May, said they are expecting "further deterioration" in the labour demand while supply growth continues.

"The unemployment rate is expected to breach five per cent by year end and rise to a peak of 5.5% across most of 2025," it predicted on its website.

ANZ economist Henry Russell said this means about 40,000 will likely be unemployed individuals by year-end.

"This will be incredibly challenging for households and translates into roughly 40,000 additional New Zealanders unable to find work," he said as quoted by Stuff.

The forecast comes as New Zealand's unemployment rate rose to 4.3% in the March 2024 quarter, as unemployed individuals went up 31,000.

It reflects the softening demand for labour that was also observed by the New Zealand Institute of Economic Research.

Challenge to Jobseeker Support scheme

But adding 40,000 more unemployed will bring about challenges to New Zealand's Jobseeker Support benefit, Stuff reported.

The scheme provides weekly payment to eligible individuals until they can find new jobs.

The current government has been firm on its stance to reduce beneficiaries of the scheme by 50,000 by 2030 after surging in the previous administration.

Among its measures include mandating about 20,000 beneficiaries of the scheme to attend a work check-in seminar after six months, as a "precursor" to its plan of introducing mandatory reapplication for the scheme every six months.