3 Feb 2014
Flash: Upside risks to New Zealand jobs on Wed - BNZ
FXstreet.com (Barcelona) - Wednesday’s Q4 labour data market in New Zealand is likely to be strong, notes Craig Ebert, Senior Economist at Bank of New Zealand.
Key Quotes
"A further fall in the HLFS unemployment rate would make a lot of sense. It would certainly fit with the many other indications of a tightening jobs market – whether in skilled or unskilled – in spite of rising immigration and the way it’s boosting labour supply growth. This could also be why consumer confidence is now riding high (something highlighted by the Reserve Bank in its recent commentary)."
"As for the hard numbers, we are going with a 0.2 point dip in the jobless rate for Q4, to 6.0%, a quarterly advance of 0.5% in jobs, along with the participation rate dipping a fraction, to 68.5%."
"Our gut feel is that one of these indicators could exhibit much more heat, but we have no strong conviction which. It might seem a stretch to expect a second successive quarterly jump in jobs following Q3’s screamer of 1.2%. But then staffing intentions have been skyrocketing over the last 6-12 months, and so it might not seem unreasonable. If we do see another strong increase in Q4 employment, the unemployment rate could easily dip well below the 6.0% level we anticipate."
"Unless, of course, the robustness in the Q4 labour market data is expressed more in the participation rate than anything else. If this measure rises forcefully it would, technically speaking, make it hard for the unemployment rate to go down. Yet participation spiked quite a bit in Q3, to 68.6%, so, who knows, maybe it struggles to hold up so high, even with increased employment? It’s another reason to wonder about a sharper fall in the Q4 unemployment rate than we expect."
"As for market pricing, post last week’s OCR meeting and Wheeler utterances, we are comfortable with where this has settled. While the market might up its odds of a 50 point move in March, we prefer to stick with our 25 point call for the meantime. Still, we also like the chances of a total of 75 basis points by June (taking the OCR to 3.25%), which compares to current market pricing of 65bps. As for the currency, its recent abatement, in spite of the tough talk from Graeme Wheeler, can only encourage the RBNZ to carry through on its OCR plans."
Key Quotes
"A further fall in the HLFS unemployment rate would make a lot of sense. It would certainly fit with the many other indications of a tightening jobs market – whether in skilled or unskilled – in spite of rising immigration and the way it’s boosting labour supply growth. This could also be why consumer confidence is now riding high (something highlighted by the Reserve Bank in its recent commentary)."
"As for the hard numbers, we are going with a 0.2 point dip in the jobless rate for Q4, to 6.0%, a quarterly advance of 0.5% in jobs, along with the participation rate dipping a fraction, to 68.5%."
"Our gut feel is that one of these indicators could exhibit much more heat, but we have no strong conviction which. It might seem a stretch to expect a second successive quarterly jump in jobs following Q3’s screamer of 1.2%. But then staffing intentions have been skyrocketing over the last 6-12 months, and so it might not seem unreasonable. If we do see another strong increase in Q4 employment, the unemployment rate could easily dip well below the 6.0% level we anticipate."
"Unless, of course, the robustness in the Q4 labour market data is expressed more in the participation rate than anything else. If this measure rises forcefully it would, technically speaking, make it hard for the unemployment rate to go down. Yet participation spiked quite a bit in Q3, to 68.6%, so, who knows, maybe it struggles to hold up so high, even with increased employment? It’s another reason to wonder about a sharper fall in the Q4 unemployment rate than we expect."
"As for market pricing, post last week’s OCR meeting and Wheeler utterances, we are comfortable with where this has settled. While the market might up its odds of a 50 point move in March, we prefer to stick with our 25 point call for the meantime. Still, we also like the chances of a total of 75 basis points by June (taking the OCR to 3.25%), which compares to current market pricing of 65bps. As for the currency, its recent abatement, in spite of the tough talk from Graeme Wheeler, can only encourage the RBNZ to carry through on its OCR plans."