ANZ: Echoes Of Previous Momentum

ANZ note that “the New Zealand labour market went from strength to strength in 2022, and we think echoes of that momentum will be seen in the Q4 labour market report.”

• “Unemployment is forecast to dip 0.1ppt to 3.2% thanks to a 0.3% Q/Q (1.5% Y/Y) lift in employment. But the whims of quarterly volatility in the HLFS data mean it will be hard to read much into the unemployment figure without the context of the wider survey.”
• “We expect wage growth continued to accelerate, with labour remaining the biggest constraint facing firms in Q4. We think private sector average hourly earnings (ordinary time) were up 1.9% Q/Q (9.1% Y/Y), and that productivity-adjusted private sector labour costs were up 1.0% Q/Q (4.1% Y/Y).”
• “While the data should confirm that the labour market ended 2022 on a high note, that doesn’t tell us much about the outlook for 2023. Forward indicators of labour demand have softened significantly in recent months, and we expect the RBNZ will downshift to a 50bp OCR hike in February as signs of deteriorating domestic demand become increasingly established.”