New Zealand Employment Reaches 14-Month Peak Amidst Iran Conflict Concerns

New Zealand's economy sustained job growth in March, even as the conflict with Iran negatively impacted business confidence and hiring plans.

Filled positions increased by 0.3% from February, reaching 2.35 million and marking the highest level in 14 months, according to a Tuesday report from Statistics New Zealand in Wellington. Job numbers have grown by 14,600 since a recent low in July, yet they remain nearly 39,000 below the level from two years ago.

Before the military action involving the US and Israel against Iran, low interest rates had enhanced optimism among businesses and consumers, aiding labor market stabilization and prompting companies to hire. Economists anticipate the economy recorded moderate growth in the first quarter, despite a significant rise in fuel costs during March.

"A modest upward trend seems to have developed over the past six months," noted Michael Gordon, a senior economist at Westpac in Auckland. "Any effects on hiring from the Iran conflict are expected to appear after a delay, as the labor market typically lags behind the broader economic cycle."

The sentiment has shifted as the geopolitical deadlock persists, with investors anticipating that the central bank may increase interest rates as soon as July. Business confidence dropped to its lowest point since mid-2024 in the first quarter, as the conflict escalated fuel and other expenses, damaging profitability. A majority of firms reported laying off workers during this period and anticipate further reductions in the three months ending in June.

Local economists predict that a report next week will show the first-quarter unemployment rate matching or exceeding the 4.5% recorded in the fourth quarter, and they forecast the rate will remain elevated through 2026.