RBNZ\u2019s July Monetary Policy Review (MPR) estimates<\/a>. The longer inflation stays outside the Bank\u2019s target band, the greater the risk it becomes entrenched. The RBNZ will be keen to avoid that, so we continue to expect further removal of monetary stimulus,\u201d Steel said.\u00a0<\/p>\n\u201cIt remains anyone\u2019s guess as to how the situation in the Middle East evolves.\u201d<\/p>\n
Lack of momentum<\/p>\n
Like BNZ, Westpac is matching the RBNZ\u2019s unemployment rate forecast of 5.4%. Senior economist Michael Gordon said the jobs market had held its ground through the Middle East conflict but hadn\u2019t gained the momentum Westpac would\u2019ve hoped to see.<\/p>\n
While households are still struggling with cost-of-living pressures, he said the existing degree of slack in the labour market is a \u201ccrucial difference\u201d between the current environment and the surge in wage growth that NZ experienced post-Covid.<\/p>\n
Because of this, Westpac expects a 0.6% rise in the LCI for the June quarter, keeping annual growth just below 2%.<\/p>\n
According to Gordon, a 0.1% rise in employment wouldn\u2019t be enough to keep up with the growth in the working-age population, which has an already-reported 0.3% rise for the quarter.\u00a0<\/p>\n
\u201cThat means we\u2019ll likely see some combination of people either moving into unemployment or dropping out of the active labour force. That said, we\u2019re talking about small increments \u2013 we expect a 0.1ppt rise in the unemployment rate to 5.4%, and a 0.1ppt fall in the participation rate to 70.3%.\u201d<\/p>\n
A \u2018relatively soft\u2019 picture\u00a0<\/p>\n
ANZ NZ and ASB economists are anticipating a slightly higher increase to the unemployment rate next week, forecasting it will rise to 5.5%.\u00a0<\/p>\n
This would take NZ to the highest level of unemployment the country has experienced since the June 2015 quarter, 11 years ago.<\/p>\n
ANZ senior economist Miles Workman said the labour market data is expected to paint a \u201crelatively soft picture of the labour market\u201d as firms will have \u201cpressed the pause button\u201d during the June quarter due to spiraling oil prices and heightened global uncertainty.<\/p>\n
\u201cFor the RBNZ, this suggests that the labour market is unlikely to become a renewed source of accelerating CPI inflation pressures any time soon,\u201d he said.<\/p>\n
ANZ also expects ongoing slack in the labour market to keep wage pressures contained, with annual wage growth measured by the LCI slowing 0.1% to 1.9%.<\/p>\n
\u201cWhile contained wage growth is not good news for households facing acute cost-of-living pressures, it does mean that wage-price spiral risks are mitigated, reducing the likelihood that the RBNZ will need to lift the OCR into outright restrictive territory (that is, well beyond 3%),\u201d Workman said.<\/p>\n
ASB also agrees that the June quarter labour market figures are likely to remain soft, despite tentative signs that the pre-Middle East conflict recovery was flowing into employment.<\/p>\n
ASB economist Wesley Tanuvasa said the \u201csize and persistence\u201d of the Middle East cost shock remain uncertain, particularly given how fluid US\u2013Iran developments are right now.\u00a0<\/p>\n
\u201cNext week\u2019s employment figures may show some improvement, but the overall story is that the labour market remains soft and Kiwi households have done it tough over the last economic cycle,\u201d he said.<\/p>\n
ASB expects the figures to show the participation rate has held at 70.4% and for the LCI to come in at 2% for a third quarter in a row.<\/p>\n
No huge spikes<\/p>\n
Kiwibank expects the June quarter labour market data to reflect the soft start to the year and for the unemployment rate to remain at 5.3%.\u00a0<\/p>\n
Kiwibank economist Alexandra Turcu said the increase in filled jobs over the quarter is likely to largely be eaten up by positive net migration and growth in the working age population. The bank’s economists expect an employment rate of 66.3% \u2013 down from 66.7% in the March quarter \u2013 and the participation rate to be 70.1%.<\/p>\n
Kiwibank anticipates wage growth to \u201ctrack sideways\u201d in the June quarter, and for the LCI will come in at 2.1%.\u00a0<\/p>\n
\u201cThe soft demand for labour, coupled with plenty of job seekers, will keep the lid on wage growth too,\u201d Turcu said.<\/p>\n
\u201cTherefore, we aren\u2019t expecting a huge spike in unemployment. In fact, we don\u2019t expect to see much movement at all.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Data this coming week could reveal New Zealand\u2019s unemployment rate has hit its highest point in 11 years.…\n","protected":false},"author":2,"featured_media":555643,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[138,111,139,69],"class_list":["post-555642","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/555642","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=555642"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/555642\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/555643"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=555642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=555642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=555642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}