NEW ZEALAND
The NZ labour market continues to ease but not by as much as consensus expected for Q2. The unemployment rate rose 0.3pp to 4.6%, its highest since Q1 2021 but in line with the RBNZ’s May expectation. Employment growth and the participation rate were stronger than expected as were private sector wages. Public sector agreements boosted overall earnings. With the labour market developing broadly as the RBNZ expects and some domestic inflation still strong, it will likely want to see Q3 CPI on October 16 before cutting rates.
- Unemployment rose 5.9% q/q in Q2 to be up 30% y/y and Statistics NZ notes that almost half were 15-24 year olds. The unemployment rate for 15-19 years is up 5.6pp y/y to 20.7% and +2.2pp to 8% for 20-24 years. The youth unemployment rate tends to be a leading indicator of labour market developments and this signals further deterioration to come.
- Employment rose 0.4% q/q with the annual rate slowing to 0.6% from 1.3% in Q1 and 4.5% in Q2 2023. Jobs growth was driven by the part-time sector (+1.9% q/q) with full-time falling (-0.1% q/q). Working age population grew 0.4% and so new jobs covered this increase.
NZ employment y/y%
Source: MNI - Market News/Refinitiv
- Underutilisation picked up to 11.8% from 11.2% in Q1 and 9.9% in Q2 2023 consistent with hours worked falling 1.2% q/q and 0.3% y/y in Q2, the weakest since Q4 2021.
- Despite softening labour market trends, private and public sector wage rises remain robust. The labour cost index rose 1.2% q/q to be up 4.3% y/y from 4.1% in Q1 and in line with Q2 2023. Private sector wages rose 0.9% q/q after 0.8% in Q1. But Statistics NZ notes that the public sector LCI rose to a series high of 6.9% y/y driven by health and education.
NZ labour costs y/y%
Source: MNI - Market News/Refinitiv
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