Continued Elevated Wage Pressures Keep RBNZ On Hiking Path

The unemployment rate for Q4 came in slightly higher than expected at 3.4% after 3.3% the previous quarter. The increase was driven by a 2.1% q/q rise in the number of unemployed while new jobs rose by only 0.1% q/q. Wages continued to rise at a solid pace but in line with expectations and Q3. The RBNZ is likely to welcome these tentative signs of easing in the overheated labour market but the worsening wage pressures are likely to mean further tightening ahead.

• Salaries and wages (including overtime) rose 1.1% q/q to 4.1% y/y, a series high. This was the third consecutive 1.1% quarterly rise, a rate not seen since 2007-08, which is likely to be a development that concerns the RBNZ. There was some easing in private sector average hourly earnings with a 0.9% q/q rise after 2.6% in Q3 but the annual rate remains above 8%.
• Full-time employment rose 2% y/y while part-time fell 1.6%. Hours worked rose a solid 1.4% q/q after 1.2% in Q3, despite people away with illness and on holiday. Vacancies fell 6.1% q/q and the ratio with unemployment has peaked.
• The underutilisation rate was also higher up to 9.4% from 9% but Statistics NZ note that this was due to “increases in the potential labour force”. The participation rate was stable at a series high of 71.7% and the employment rate at 69.3%.

Source: MNI - Market News/Refinitiv

NZ employment y/y%

Source: MNI - Market News/Refinitiv