February 04, 2025 22:28 GMT
NEW ZEALAND: Spare Capacity Building In Labour Market
NEW ZEALAND
The Q4 unemployment rate rose 0.3pp to 5.1%, in line with consensus and the RBNZ, to be its highest since the Covid-impacted Q3 2020. Employment fell 0.1% q/q to be down 1.1% y/y after -0.6% & -0.6% in Q3, which was revised lower. Wages growth continues to moderate and is either near 3% or under. Given the data printed close to the RBNZ’s November forecasts, which also suggested a 50bp rate cut in Q1 2025, another 50bp on February 19 remains likely.
NZ unemployment rate %
Source: MNI - Market News/Refinitiv
- There is growing spare capacity in the labour market with the Q4 underutilisation rate rising to 12.1% from 11.6% in Q3 and 10.7% a year ago. Thus it is not surprising that hours worked fell for the fourth straight quarter down 0.5% q/q and 2.5% y/y. The number of unemployed grew 5.4% q/q & 26.8% y/y after -24.4% y/y in Q3.
- Job shedding was focused in full-time jobs, another sign of weakness in the labour market. Any cautious hiring is occurring in the part-time sector with PT jobs rising 0.2% q/q to be up 1.4% y/y.
- The labour cost index rose 0.6% q/q with the annual rate moderating to 3.3% from 3.8%, the lowest since Q1 2022. Private wages rose 0.6% q/q, slightly higher than the RBNZ forecast, to be up 2.9% y/y down from 3.4% in Q3.
- The minimum wage is set to rise only 1.5% on April 1, while lower inflation and labour demand should continue to weigh on other wages, which should make the RBNZ comfortable that inflation is sustainably within its 1-3% band.
NZ wages y/y%
Source: MNI - Market News/Refinitiv
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