New Zealand's unemployment rate hits five-year high, may prompt central bank to resume interest rate cuts.

New Zealand's second quarter unemployment rate rose to its highest level in nearly five years, the latest sign of an economic slowdown that could prompt the Reserve Bank of New Zealand to resume rate cuts. New Zealand's statistics agency announced on Wednesday in Wellington that the unemployment rate increased from 5.1% in the first quarter to 5.2%. This is the highest level since the third quarter of 2020, but lower than the economists' forecast of 5.3%. Employment fell by 0.1% compared to the previous period, in line with expectations. Uncertainty caused by US President Donald Trump's tariff policies and their impact on global trade has severely impacted the New Zealand economy. Business confidence declined in the second quarter, with contraction in manufacturing and services sectors, a sluggish real estate market, raising concerns about a possible economic growth slowdown. Following the data release, the New Zealand dollar strengthened. According to forecasts released in May, the central bank predicts the unemployment rate will rise to 5.2%, with employment growth of 0.2%. It is expected that the Reserve Bank of New Zealand will resume rate cuts on August 20th, after pausing in July. Most economists predict an official cash rate cut of 25 basis points, to 3%.