NZ unemployment rate fell to 4.8% in Q2, but jobs and participation down - Westpac

Today's NZ employment figures left a picture of continued moderate growth in economic activity, but still muted wage pressures, notes Satish Ranchhod, Economist at Westpac. 

Key Quotes

Overall, today’s figures left us with a picture of continued moderate growth in economic activity, but still muted wage pressures.

The unemployment rate fell to 4.8% in the June quarter, in line with the market median forecast, but just a touch below our forecast. 

Employment fell 0.2% in the June quarter. However, looking at the jobs reports more generally, this doesn’t signal any significant weakness. Rather, the economy looks like it is continuing to expand at a modest pace. Growth in hours worked remains positive.

Labour market participation unexpectedly fell to 70.0%.

Wage inflation remained muted, as expected. 

No implications for next week’s RBNZ decision.

Market implications

The New Zealand dollar fell 40pts to 0.7430 against the US dollar after the release, presumably in reaction to the surprise drop in employment.

Today’s result is unlikely to have a large impact on the RBNZ’s thinking ahead of next week’s Monetary Policy Statement. While there were mixed messages from the jobs figures, overall today’s data didn’t deliver major surprises. Looking at the jobs figures in conjunction with labour hours and today’s wage numbers, we’re still left with a picture of modest growth in activity but still subdued inflation pressures.