Westpac’s Monthly Jobs Indicator Points To Strong Labour Market

Westpac’s Monthly Employment Indicator showed a more-than-expected 0.6% m/m rise in-filled jobs to +3.8% y/y, the fastest since January 2022. The series is based on income tax data, which is not only comprehensive but also monthly, whereas Stats NZ labour market data is quarterly with the Q2 release not due until August 2.

• Westpac notes that the robust April outcome has been boosted by the surge in immigration. Recent net inward migration has been running at a 100k annualised rate. But employment growth is still exceeding that of the increase in the overall working-age population and thus not signalling a collapse in the labour market any time soon.
• The RBNZ moved to neutral at its May 24 meeting and while its unemployment rate forecasts were revised down, it observed that pressures were easing in the labour market (see MNI RBNZ Review here.) Westpac said that “the MEI is one indicator that the RBNZ will need to watch closely, as a reminder that the demand for labour is as much a factor as the supply when it comes to inflation pressures.”