Downside Surprise To Jobs Data Likely To Increase Easing Calls

With the next RBNZ decision on August 14 and increasing easing expectations, the Q2 labour market data on August 7 will be watched very closely and if it is weaker than expected, there’s likely to be further rate cut calls. Increased labour supply and softening demand mean that Bloomberg consensus expects the unemployment rate to rise 0.4pp to 4.7%, the highest since the Covid-impacted Q4 2020, and for wage pressures to ease.

• Unemployment forecasts are between 4.4% and 4.9%, all higher than Q1’s 4.3%. Local banks are at consensus’ 4.7%, except BNZ who is in line with the RBNZ’s May expectation at 4.6%. The participation rate is projected to ease 0.2pp to 71.3%.
• Monthly filled jobs data are pointing to a contraction in Q2 employment with June -0.6% q/q. Jobs are forecast to fall 0.2% q/q to be flat on the year with forecasts ranging from +0.4% to -0.4% q/q. ASB and ANZ are in line with consensus, whereas Kiwibank is forecasting -0.3% q/q, Westpac -0.4% and BNZ -0.1%.
• Private sector wage growth is forecast to rise 0.8% q/q but that will see it moderate to 3.5% y/y from 3.8%. Westpac notes that there are upside risks to the aggregate from public sector pay agreements. Lower inflation and vacancies as well as increased applicants per job ad are reducing wage pressures.
• In Q2 the minimum wage rose 2%, while teachers received 4% and nurses 3%.