Unemployment To Rise As New Jobs Less Than Population Growth

Employment growth in Q4 is forecast to rise 0.3% q/q with the annual rate slowing to 2.1% y/y from 2.4% but this job growth is unlikely to be high enough to absorb the increase in the supply of labour and so the unemployment rate is expected to jump 0.4pp to 4.3%, highest since Q4 2018. While wage growth is expected to remain elevated, it should ease, but a lot more will be needed before the RBNZ will begin easing policy.

• Employment estimates are between flat and +0.5% q/q with most around 0.2-0.3%, including the major local banks. The working age population grew 0.6% q/q.
• The unemployment rate is uniformly forecast to rise but estimates range from 4% to 4.5%. The local banks and the RBNZ are all in the 4.2-4.3% range.
• Private wages are expected to rise 0.8% q/q in line with Q3 with projections between 0.7-1.0%. ASB expects 0.7%, ANZ & Westpac +0.8% but BNZ +1.0%. The easing in skill shortages and price pressures is helping to keep a lid on wages growth.