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New Zealand quarterly employment report overview

Early Wednesday at 22:45 GMT sees the quarterly employment data from the Statistics New Zealand. Rising odds for the RBNZ’s May rate cut highlights the first quarter (Q1) 2019 unemployment rate and employment change figures for the New Zealand Dollar (NZD) traders. Additionally, participation rate and labor cost index are some other jobs indicators that are also up with the headline figures.

Market consensus favors a downtick in the unemployment rate to 4.2% from 4.3% with a likely +0.5% increase in employment change versus +0.1% prior. Further, the participation rate and labor cost index (QoQ) are both expected to remain unchanged at 70.9% and 0.5% respectively.

Analysts at ANZ are less optimistic about the Kiwi jobs report as they say:

We expect to see a stable unemployment rate of 4.3% in today’s Q1 Labour Market Statistics, accompanied by modest growth in wages and employment. These data have been volatile of late, but the general trend has been a gradual tightening. But further improvement in the near term seems unlikely with GDP growth subdued. A stable or even slightly lower unemployment rate should set the scene for the RBNZ to deliver a dovish May MPS but hold off on an OCR cut. A higher unemployment rate and subdued wage inflation would add to the risk of a rate cut as soon as May.

TD Securities expects a bit softer employment data giving more importance to upcoming RBNZ meet. Their report says,  

Jobs growth is likely to soften, but due to a lack of suitable labour rather than a collapse in activity. As the labour mkt is tight we also expect a pick up in wages growth (0.6% vs mkt 0.5% q/q). The update feeds into the RBNZ’s Monetary Policy Statement, which is ‘live’ despite being the first with a Board. The RBNZ expects a drop in the u-rate to 4.2% (TD 4.2%) well within the estimates of maximum sustainable employment. We look for the 0.4% q/q rise in jobs to lower the u-rate with a pip lower participation rate of 70.8% (mkt 70.9%).

How could it affect the NZD/USD?

Given the sluggish prints of headline economic data already painted RBNZ’s rate cut, a weak employment report might not hesitate to reverse the NZD/USD pair’s latest recovery. It should also be noted that an upbeat signal from the headline numbers will also be observed closely to confirm the Kiwi’s further upside.

On the chart, NZD/USD is close to five-week-old descending trend-line, at 0.6680, a break of which can propel the quote towards 0.6720 and 0.6720 ahead of confronting the 50-day and 100-day simple moving average (SMA) confluence region near 0.6780/85. Meanwhile, 0.6630, 0.6600 and 0.6580 are likely nearby supports to watch during the pullback before concentrating on 0.6510 rest-point.

Key Notes

NZD/USD Technical Analysis: Kiwi at daily highs ahead of NZ quarterly employment data

NZD/USD stays directionless below 0.67 ahead of NZ labour market data

About New Zealand unemployment rate and employment change

The quarterly report on New Zealand unemployment rate and employment change is being released by the Statistics New Zealand.  

The unemployment rate is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand labor market. As a result, a rise leads to weaken the New Zealand economy. A decrease of the figure is seen as positive (or bullish) for the NZD, while an increase is seen as negative (or bearish).

On the other hand, employment change is a measure of the change in the number of employed people in New Zealand. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. A high reading is seen as positive (or bullish) for the NZ dollar, while a low reading is seen as negative (or bearish).