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New Zealand’s unemployment rate dipped to 4.2% in the March quarter, slightly lower than the market expected, notes the analysis team at ANZ.

Key Quotes

“But the details weren’t strong – the fall was due to a decline in participation with employment growth actually falling 0.2% in the quarter. Momentum in the labour market appears to have slowed, consistent with the soft GDP outturns seen over the past year.”

“Wage inflation ticked up 0.3% q/q, leaving annual growth at 2.0% y/y, less than we and the RBNZ expected. Looking through temporary factors, underlying wage inflation is very subdued.”

“This data is consistent with the softer growth outlook that implicitly lay behind the RBNZ’s dovish March OCR Review, and is set to be formalised in the May MPS. We continue to expect the first rate cut in August, with next week’s MPS to set the stage.”