ASB: Labour Market Remains Extremely Tight

ASB expect the Q4 labour market data “to confirm the labour market remained extremely tight in Q4. We expect the unemployment rate to fall toward a near-record low of 3.2%. We expect continued employment growth of 0.3%, down slightly from Q3’s expansion. Utilisation metrics are likely to show little spare capacity, with both underutilisation and underemployment pointing to acute worker shortages. Labour cost inflation is set to accelerate to a new record high, hitting 4.3% annually. We expect the NZ labour market to cool over 2023 as supply ticks up and demand weakens, but for now, the RBNZ will press on with monetary tightening until it is confident inflationary pressures are under control.”