Q1 Labour Market Data Not Expected To Show Pressures Easing

The Q1 employment and wages data is released on Wednesday May 3 and will be an important input into the May 24 RBNZ rate decision. The data is expected to be fairly robust showing little sign of easing labour market or wage pressures.

• Employment is expected to grow by 0.5% q/q and 1.8% y/y, which would be the fastest growth in a year. Analysts’ estimates are in a range of flat to 0.8% q/q and 1.5% to 2.2% y/y. Bank NZ is forecasting 0.4% q/q, ANZ +0.5%, Kiwibank +0.7% and Westpac +0.8%.
• The unemployment rate is expected to rise 0.1pp to 3.5% as the participation rate also rises 0.1pp to 71.8%. Unemployment rate estimates are between 3.3% and 3.8%. ANZ is predicting a fall to 3.3% but Bank NZ, Kiwibank and Westpac all expect it to be stable at 3.4%.
• Private wages including and excluding overtime are both expected to rise another 1.1% q/q in Q1 after increasing the same amount last quarter. Excluding overtime the range of forecasts is 0.7-1.1% with Bank NZ forecasting 0.9% and both ANZ and Westpac 1.1%. Wages growth has been elevated running above 8% y/y, and so the RBNZ would be pleased if these series undershot expectations.