At 5.4% unemployment was up from the previous quarter (5.3%) and, based on the forecasts of market economists, slightly worse than expected.<\/p>\n
But as the Prime Minister has pointed out, it was still lower than earlier Treasury forecasts (5.5%).<\/p>\n
Prime Minister Christopher Luxon. Photo \/ Mark Mitchell<\/p>\n
The economists and PM also seem to be on the same page with regard to the overall trend for the labour market.<\/p>\n
Employment was up. Around 15,000 jobs were created in the quarter.<\/p>\n
The reason unemployment went higher was that more people entered the labour market.<\/p>\n
In previous months, the lack of jobs had seen more people leaving the labour market for further training.<\/p>\n
An increase in the participation rate isn\u2019t a bad thing, as it suggests that there is more optimism out there.<\/p>\n
Economists see the data as consistent with the slow recovery we have underway.<\/p>\n
But that shouldn\u2019t be a free pass for the Government.<\/p>\n
As I pointed out in my column on Sunday<\/a>, the first increase in the employment rate for 18 months isn\u2019t too flash in the context of an export boom that has been running for at least as long.<\/p>\n RBNZ back in action<\/p>\n After what some have claimed is too long a summer break, the Reserve Bank returns next week with a new season of Inflation Busters, the popular reality show we all have an opinion on.<\/p>\n The past year was a wild ride with the Official Cash Rate falling from 4.25% to 2.25% and the sudden departure of Governor Adrian Orr, followed by months of controversy about how that was handled.<\/p>\n Despite having a new lead in Governor Anna Breman, don\u2019t expect fireworks from the first episode.<\/p>\n The RBNZ will deliver its first Monetary Policy Statement of the year at 2pm on Wednesday.<\/p>\n The Official Cash Rate isn\u2019t going anywhere for this one.<\/p>\n All the focus will be on gauging how worried the RBNZ is about elevated levels of inflation and when it might see the need to start lifting the OCR.<\/p>\n BNZ\u2019s Stephen Toplis is picking that, after it weighs the state of the recovery, the remaining headwinds and annoyingly persistent inflation, the RBNZ will take a cautious stance.<\/p>\n BNZ is forecasting the first OCR rise will be needed by September but Toplis doesn\u2019t see any reason for the new Governor to show her hand on that.<\/p>\n \u201cWe do expect it to acknowledge the pick-up in growth and higher starting point for inflation,\u201d Toplis wrote in his preview.<\/p>\n But the RBNZ would likely still express confidence that inflation will come back to the mid-point of the target band and push back on market pricing, which has a 25-point hike priced by October, he said.<\/p>\n \u201cSpecifically, we expect the possibility of an easing to be removed from the Bank\u2019s published interest rate track such that the low remains at 2.25% through to the December quarter,\u201d he said.<\/p>\n \u201cFrom there on in, we would expect the track to be around 10 basis points higher than previously published.\u201d<\/p>\n So one for the purists perhaps.<\/p>\n Thankfully, we\u2019ll have the first press conference from the new Governor to liven things up \u2013 will there be jokes, how will she handle stupid questions from the press pack, and will she pass muster with the online critics who took issue with Orr\u2019s aggressive style?<\/p>\n Aussie slowdown<\/p>\n Australia\u2019s economic performance has been running well ahead of ours for the past few years.<\/p>\n But with annual inflation at 3.8% and the Reserve Bank having begun its hiking cycle last week (the OCR is now 3.85%) there are fears that economic growth will slow dramatically.<\/p>\n Annual GDP growth has been running at 2.1% and the unemployment rate is down to 4.1%.<\/p>\n But the RBA is warning that growth will fall to just 1.6% for the year to June 2028.<\/p>\n The Australian Financial Review describes that as a \u201cdire warning\u201d. I hate to think how they\u2019d describe New Zealand\u2019s recent performance.<\/p>\n Of course, if you don\u2019t count the short-lived Covid crash of 2020, Australia hasn\u2019t had a real recession since 1991.<\/p>\n They don\u2019t know how lucky they are…mate.<\/p>\n Ultimately Australia is facing the same issue we do with slowing productivity growth limiting capacity for economic growth (without causing inflation).<\/p>\n But 1.6% growth would be well below capacity, suggesting Australia is headed into a cyclical downturn out of sync with New Zealand which is projected to see GDP growth of 2.8% in 2027.<\/p>\n That should resolve Australia\u2019s inflation problem but we can expect to see unemployment rise. It\u2019s possible things won\u2019t be quite so rosy for young Kiwis trying their luck across the ditch.<\/p>\n We might finally start to see an improvement in our net migration rate, which could further underpin growth in New Zealand.<\/p>\n Green shoots<\/p>\n I\u2019ve already mentioned the green shoots buried below the surface of the labour market data last week.<\/p>\n Otherwise things have been quiet, but here\u2019s a couple of positive snippets.<\/p>\n Keep on Truckin\u2019<\/p>\n ANZ\u2019s Truckometer rolled into town showing a decent lift in both light traffic and heavy traffic in December, followed by a slight easing in January.<\/p>\n The Light Traffic Index (LTI) eased 1.1% in January but is up a solid 3.6% year-on-year.<\/p>\n The Heavy Traffic Index (HTI) fell 2.4% in the month, but this was off the back of a 3.2% lift in December. It is up 2% y\/y, with annual growth trending up.<\/p>\n Nothing to worry about, according to ANZ chief economist Sharon Zollner.<\/p>\n The trend for both remained positive, she said.<\/p>\n Retail rebound<\/p>\n Per-person spending on Westpac-issued debit and credit cards was up 6% in January compared to the same time last year, according to the bank\u2019s latest Retail Pulse survey.<\/p>\n \u201cHouseholds have been spending more on essentials like food, petrol and utilities as the cost of living has continued to rise,\u201d Westpac senior economist Satish Ranchhod said.<\/p>\n More encouragingly, however, there had also been a lift in discretionary spending, he said.<\/p>\n \u201cThere have been particularly large increases in spending in the hospitality sector, as well as increased sales of furnishings and other household durables.\u201d<\/p>\n Spending appetites continued to be supported by the strength in commodity export earnings.<\/p>\n Ranchhod noted that many retailers continue to face tough conditions and squeezed margins, but were feeling more optimistic about the outlook for 2026, with an increase in forward orders and plans for hiring.<\/p>\n Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up to his weekly newsletter, click on your user profile at nzherald.co.nz<\/a> and select \u201cMy newsletters\u201d. For a step-by-step guide, click here<\/a>. If you have a burning question about the quirks or intricacies of economics send it to liam.dann@nzherald.co.nz<\/a> or leave a message in the comments section.<\/p>\n","protected":false},"excerpt":{"rendered":"You have described employment as a lagging indicator both going into and coming out of recessions, but what…\n","protected":false},"author":2,"featured_media":213500,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1443,365,67155,34353,14772,138,14107,5782,14769,11774,9961,10668,1951,219,14768,2082,305,46662,191,13484,2944,296,14774,185,12514,14770,14776,6096,14771,130,111,43,6042,139,69,26108,16485,9831,14773,19257,14777,14775,7806,544,199,61,241,686,6041,1845],"class_list":["post-277494","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-about","tag-ai","tag-aussies","tag-blame","tag-burning","tag-business","tag-click","tag-comments","tag-deeper","tag-dive","tag-downturn","tag-economic","tag-economics","tag-economy","tag-every","tag-for","tag-have","tag-headed","tag-here","tag-higher","tag-inside","tag-into","tag-intricacies","tag-is","tag-leave","tag-leftfield","tag-liamdannnzheraldconz","tag-message","tag-missed","tag-more","tag-new-zealand","tag-news","tag-newsletter","tag-newzealand","tag-nz","tag-plus","tag-pushing","tag-question","tag-quirks","tag-rate","tag-section","tag-send","tag-sign","tag-some","tag-take","tag-to","tag-unemployment","tag-week","tag-weekly","tag-welcome"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/277494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=277494"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/277494\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/213500"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=277494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=277494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=277494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Reserve Bank Governor Anna Breman. Photo \/ Mark Mitchell<\/p>\n