Q1 Labour Data Expected To Show Continued Moderation

The labour market is widely expected to have eased further in Q1 with slower growth resulting in less hiring and migration increasing the labour supply and thus reducing pressure on wages. Bloomberg consensus has a 0.3pp increase in the unemployment rate to 4.3%, highest in over 5 years, and forecasts employment growth to moderate to 0.3% q/q and 1.6% y/y from 0.4/2.4% in Q4. So it is not surprising that the increase in private wages is forecast to slow to 0.8% q/q from 1.0%.

• If these projections materialise they will be consistent with the RBNZ’s February forecasts for Q1 unemployment of 4.2% and 1.5% y/y employment growth and so are unlikely to change the central bank’s on hold stance.
• Employment forecasts are in a wide range between -0.2% and +0.6% q/q. Of the local banks ASB is at the low end forecasting a 0.1% q/q rise, while ANZ and BNZ are at consensus’ 0.3% and Westpac slightly higher at 0.4%.
• Unemployment expectations are between 4.1% and 4.5% with most around 4.2-4.3%. ANZ and Westpac are 0.1pp below consensus at 4.2% while ASB and BNZ are at 4.3%.
• Private wages including overtime are projected to rise by between 0.6% and 0.9% q/q in Q1. ASB & ANZ expect a consensus 0.8% and BNZ & Westpac a slightly lower 0.7%.
• The RBNZ expected in February labour cost growth to ease to 3.8% y/y in Q1.