NZ: Labour market tightness to show signs of easing in Q1 – TDS

The Global Strategy Team at TD Securities (TDS) offers a brief preview of the upcoming release of the quarterly employment details from New Zealand, scheduled during the Asian session on Wednesday.

Key quotes:

“We expect labour market tightness to show signs of easing in Q1, with the unemployment rate edging higher to 3.6% (RBNZ: 3.5%) from 3.4% in the previous quarter. We expect some disruption to the jobs market in Q1 given the impact of Cyclone Gabrielle and see flat employment growth over the quarter. However, a fall in the participation rate could help cap a rise in the unemployment rate. We expect private wages to rise at a still-firm pace of 1.0% q/q, bringing the annual increase in the Labour Cost Index (LCI) to 4.6% y/y, a new record. After its surprise 50bps hike, the RBNZ has shown its resolve to tame inflation and a softer labour market print may not be enough to dissuade them from hiking another 25bps in May.”