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3 Feb 2015
NZ jobs to further affirm strength of the economy - BNZ
FXStreet (Bali) - According to Economists at the Bank of New Zealand, they expect today's NZ jobs data to further affirm the strength of the economy and the growing tightness in the labour market.
Key Quotes
"As for the employment data, we expect this to be a further affirmation of the strength of the economy and the growing tightness in the labour market. We are forecasting a 0.9% increase in the numbers employed over Q4, 2014. This will produce annual growth of 3.1%."
"While our forecasts look robust, leading indicators of job growth suggest that there is substantial upside risk to our expectations. Growth well in excess of 1.0% for the quarter cannot be ruled out. The strength in employment is also consistent with our view that the economy grew 0.9% through Q4, delivering annual growth of 3.5%, which must surely be above potential and add to inflationary pressure in the economy."
"The extent of the excess demand being created will be partly revealed in the unemployment rate. We are forecasting this to remain unchanged at 5.4% reflecting the fact that the surge in demand for labour is being met by soaring net migration inflows and a continued upward trend in the participation rate (expected at 69.2%). While low, unemployment at this level would only imply modest upward pressure on inflation. If, however, the upside risks to our forecasts are realized then that inflationary pressure will appear more urgent."
"Interestingly, “core” wage inflation has been pushing steadily higher over the last few quarters and has largely been ignored by commentators. Private Sector LCI (Labour Cost Index) inflation, for ordinary time wage rates, had climbed to an annual 1.85% in the September quarter 2014 from a low of 1.59% back in March. We reckon it will head higher to a smidgen under 2.0% in the fourth quarter and be well through 2.0% by March on its way to a peak of 2.5%. If we are right this will reveal a higher wage environment than the RBNZ is projecting."
Key Quotes
"As for the employment data, we expect this to be a further affirmation of the strength of the economy and the growing tightness in the labour market. We are forecasting a 0.9% increase in the numbers employed over Q4, 2014. This will produce annual growth of 3.1%."
"While our forecasts look robust, leading indicators of job growth suggest that there is substantial upside risk to our expectations. Growth well in excess of 1.0% for the quarter cannot be ruled out. The strength in employment is also consistent with our view that the economy grew 0.9% through Q4, delivering annual growth of 3.5%, which must surely be above potential and add to inflationary pressure in the economy."
"The extent of the excess demand being created will be partly revealed in the unemployment rate. We are forecasting this to remain unchanged at 5.4% reflecting the fact that the surge in demand for labour is being met by soaring net migration inflows and a continued upward trend in the participation rate (expected at 69.2%). While low, unemployment at this level would only imply modest upward pressure on inflation. If, however, the upside risks to our forecasts are realized then that inflationary pressure will appear more urgent."
"Interestingly, “core” wage inflation has been pushing steadily higher over the last few quarters and has largely been ignored by commentators. Private Sector LCI (Labour Cost Index) inflation, for ordinary time wage rates, had climbed to an annual 1.85% in the September quarter 2014 from a low of 1.59% back in March. We reckon it will head higher to a smidgen under 2.0% in the fourth quarter and be well through 2.0% by March on its way to a peak of 2.5%. If we are right this will reveal a higher wage environment than the RBNZ is projecting."