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Contradictions and uncertainty characterise economists' reaction to yesterday's surprise rise in the unemployment rate.
Most economists agree that part of the 0.8% rise in unemployment is a technical correction of the data after it unexpectedly fell 1.1% in January to March 2010.
Expectations on the rate for April-June varied from 6.2-6.4% but after the rate come out yesterday at 6.8%, reactions really started to differ.
ANZ National Bank Chief Economist Cameron Bagrie said on NZI Business this morning that he sees some positive guidance in the numbers.
"The numbers are just all over the place. But, if you look at some of the detail, indicators such as hours worked, there were up 1.3% in the March quarter and 0.6% in the
June quarter so they are still signalling to us a little bit of positive momentum in the economy.
"You don't work your staff more hours unless there is some underlying demand out there."
Bagrie went on to note that the overall rate for the six months was around a 0.5% increase and though the data was weak, the signs are still there that the economy is "performing OK".
He said economists realise that Kiwis may not be feeling like much growth is happening because jobs, housing and retailing are still weak and the growth is mostly coming from exports which affects less people.
"There's growth but we call it grumpy growth at the moment," he said.
However, the two lead economists at Westpac were more distrustful of Statistics New Zealand's Household Labour Force Survey (HLFS), which provides the numbers.
"The numbers are just too extreme, and too suspiciously concentrated on one group of people, for us to take the HLFS at face value. We doubt very much that the unemployment rate really dropped to 6% before bouncing to 6.8%," said Brendan O'Donovan and Dominick Stephens.
Stephens predicted on NZI Business earlier this week that unemployment would only jump to 6.2% and said today that they still felt the figures supported a "norrmal labour market recovery, not a rapid one".
Their view is partially echoed by BNZ's Head of Research, Stephen Toplis, who was bullish with his assessment of the data.
"The HLFS was unequivocally weaker than expected. However, it would be dead wrong to conclude that it says the economic recovery is stalling, which seems to be what the market is now pricing."
Toplis said the BNZ still believed there is an ongoing economic recovery and interest rates will continue to rise until they reached a more normal point.
Whereas Bagrie described Reserve Bank governor Alan Bollard as now being in "a bit of a pickle" and said a rate rise was a 50/50 call.
Criticism increasing
Non-bank economists have been much more willing to critique last week's Official Cash Rate rise and suggest New Zealand's economy is not growing.
Dr Ganesh Nana, of Business and Economic Research Limited (BERL), told Breakfast today that the end of the recession was hailed much too soon.
"I think the cheerleaders of the recovery have got a bit of soul-searching to do now," he said.
Nana said that while there have been occasional good pieces of data throughout the last six months, the longer-term picture was always bleaker.
"The recovery was never there, it was never sustained, it was never broad-based enough to give us confidence to say that we were well and truly in a growth phase."
He believes New Zealand is not at the beginning of a double-dip recession but rather just on a very slow pace of recovery.
Nana said he hopes that any interest rate rises will now be stopped by the Reserve Bank and that Bollard will go back to the drawing board and re-assess his whole approach.
