New Zealand’s fourth quarter (Q4) employment data recently revealed mixed results. Following the outcome, analysts at Westpac considered the releases as helpful to provide a positive surprise for the Reserve Bank in terms of its two mandates: price stability and supporting maximum sustainable employment.
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The December quarter labor market surveys saw a dip in the unemployment rate and a further pickup in wage growth.
The details weren’t entirely positive, with weak employment growth and falling labor force participation, but there was a consistent message that the labor market is getting tight.
The result was stronger than expected by the market and the Reserve Bank, with forecasts clustered around an unchanged reading.
The Reserve Bank has emphasized looking at a broad range of measures of labor market tightness. But on balance they are likely to tell a similar story: the labor market is getting tight.
Overall, today’s results will be a positive surprise for the Reserve Bank in terms of its two mandates: price stability and supporting maximum sustainable employment. That will leave next week’s Monetary Policy Statement attempting the strike a balance between a stronger picture of the domestic economy and the rapidly developing risks in the global environment.
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