6 May 2016
NZD: Robust NZ labour market - BNZ
Craig Ebert, Senior Economist at BNZ, suggests that the recent NZ’s March quarter labour market data were fundamentally robust.
Key Quotes
“Sure, there will be those who will jump on the jump in the unemployment rate. It lifted to 5.7%, from a revised 5.4% in Q4 2015 (initially 5.3%). But that would be to miss the broader point that employment has picked up to a very strong pace and participation in the labour market is soaring anew. There was even a strengthening in some key wage inflation measures. Hours worked, meanwhile, attested to good economic expansion in Q1 GDP.
The unemployment result we’d describe as middling rather than weak. Following its big drop from 6.0% in Q3 of last year to 5.4% in Q4 – the lowest since 2009 – it was always prone to a technical correction upwards in Q1 2016. And so it came to pass. We just failed to nail the extent of this technical move. We, like the market (and the RBNZ), expected a lift to 5.5%.
In an underlying sense, however, we’re talking about a relatively robust economy, which today’s range of labour market results attested to. It seems the markets have taken the data in similar style. This labour market reports don’t alter the view we shifted to after seeing the Reserve Bank’s OCR decision and commentary last Thursday. We are still playing the 9 June Monetary Policy Statement from the cut side, while we believe any easing after that, to 1.75%, is looking line ball.”
Key Quotes
“Sure, there will be those who will jump on the jump in the unemployment rate. It lifted to 5.7%, from a revised 5.4% in Q4 2015 (initially 5.3%). But that would be to miss the broader point that employment has picked up to a very strong pace and participation in the labour market is soaring anew. There was even a strengthening in some key wage inflation measures. Hours worked, meanwhile, attested to good economic expansion in Q1 GDP.
The unemployment result we’d describe as middling rather than weak. Following its big drop from 6.0% in Q3 of last year to 5.4% in Q4 – the lowest since 2009 – it was always prone to a technical correction upwards in Q1 2016. And so it came to pass. We just failed to nail the extent of this technical move. We, like the market (and the RBNZ), expected a lift to 5.5%.
In an underlying sense, however, we’re talking about a relatively robust economy, which today’s range of labour market results attested to. It seems the markets have taken the data in similar style. This labour market reports don’t alter the view we shifted to after seeing the Reserve Bank’s OCR decision and commentary last Thursday. We are still playing the 9 June Monetary Policy Statement from the cut side, while we believe any easing after that, to 1.75%, is looking line ball.”