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NEW ZEALAND: Employment Contraction Expected Driving Higher Unemployment

NEW ZEALAND
APACNew ZealandBulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Q3 labour market data including wages are released on Wednesday. They are expected to show a contraction in employment with the unemployment rate rising to 5% driven by lower growth and job shedding. This softening in labour demand should help to ease wages growth, as well as no new public sector agreements, which drove the Q2 increase. The RBNZ meets on November 27 and is likely to cut rates again but the size of the move is currently uncertain. 

  • Bloomberg consensus is forecasting a 0.4% q/q drop in employment resulting in it rising only 0.1% on a year ago down from 0.6% y/y in Q2. The range of forecasts is quite wide between +0.1% q/q to -0.8% q/q.
  • The major local banks are all expecting a contraction in employment with ANZ at consensus but the rest below. ASB & BNZ are forecasting -0.5% q/q, Westpac -0.6% q/q and Kiwibank -0.7% q/q. Q3 filled jobs fell 0.7% q/q. So there may be downside risks to the consensus forecast.
  • As the economy seems to be cutting jobs, the unemployment rate is forecast to rise 0.4pp to 5% with projections between 4.8% and 5.3%. BNZ, Kiwibank and Westpac are all expecting a consensus outcome, while ANZ is 0.1pp below at 4.9% and ASB 0.1pp above at 5.1%.
  • Private wages are forecast to rise 0.7% q/q after 0.9% q/q in Q2, which was impacted by public sector wage agreements. ASB, ANZ, Kiwibank and Westpac are all in line with consensus while BNZ is projecting slightly softer growth at 0.6% q/q. 
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Q3 labour market data including wages are released on Wednesday. They are expected to show a contraction in employment with the unemployment rate rising to 5% driven by lower growth and job shedding. This softening in labour demand should help to ease wages growth, as well as no new public sector agreements, which drove the Q2 increase. The RBNZ meets on November 27 and is likely to cut rates again but the size of the move is currently uncertain. 

  • Bloomberg consensus is forecasting a 0.4% q/q drop in employment resulting in it rising only 0.1% on a year ago down from 0.6% y/y in Q2. The range of forecasts is quite wide between +0.1% q/q to -0.8% q/q.
  • The major local banks are all expecting a contraction in employment with ANZ at consensus but the rest below. ASB & BNZ are forecasting -0.5% q/q, Westpac -0.6% q/q and Kiwibank -0.7% q/q. Q3 filled jobs fell 0.7% q/q. So there may be downside risks to the consensus forecast.
  • As the economy seems to be cutting jobs, the unemployment rate is forecast to rise 0.4pp to 5% with projections between 4.8% and 5.3%. BNZ, Kiwibank and Westpac are all expecting a consensus outcome, while ANZ is 0.1pp below at 4.9% and ASB 0.1pp above at 5.1%.
  • Private wages are forecast to rise 0.7% q/q after 0.9% q/q in Q2, which was impacted by public sector wage agreements. ASB, ANZ, Kiwibank and Westpac are all in line with consensus while BNZ is projecting slightly softer growth at 0.6% q/q.