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Analysts at Westpac explained that they expect the unemployment rate to hold steady at 4.2% in the December quarter. Economic growth has slowed over the last year to an about-trend pace, which is consistent with a flattening out in unemployment and wage growth.

Key quotes

  • We expect the unemployment rate to hold steady at 4.2% in the December quarter.
  • Economic growth has slowed, but from above-trend to around its trend pace.
  • This is consistent with a flattening out in unemployment, rather than a softening.
  • Annual wage growth is expected to remain at a 10-year high. There were no special factors such as public sector pay settlements in the December quarter.
  • The economy is running close to the Reserve Bank’s assessment of ‘maximum sustainable employment’. The RBNZ will be wary of any softening in the labour market outlook this year, but we don’t expect next week’s releases to provide a catalyst for further interest rate cuts.