New Zealand’s Q1 2017 labor market data stronger than expectations, jobless rate drops to 4.9 pct

New Zealand’s labor market data for the first quarter of this year came in stronger than anticipated; however, wage growth remained muted. The jobless rate dropped to 4.9 percent, reversing the rises recorded in the prior quarter. Consensus expectations were for the unemployment rate to have remained at 5.2 percent.

Underlying the fall in jobless rate was strong jobs growth. Employment in the nation was up 1.2 percent sequentially, with about 29,000 more people in work. This was stronger than analysts’ projection. Meanwhile, the labor force rose by about 23,000 people.

Expansion in the New Zealand economy and employment has been attracting additional people into the labor market and the trend has been strengthened by solid levels of migration, noted Westpac in a research report. The participation rate rose to a new record high of 70.6 percent in the first quarter of 2017. Most of the jobs growth seen in the first quarter was in part-time jobs, which recorded a rise of 3.1 percent sequentially, as compared with a more modest growth of 0.6 percent seen in full time jobs.

The employer-focused Quarterly Survey of Employment released today, showing that the employment continued to grow but modestly. Full-time employee figures were up 0.4 percent sequentially.

The labor demand continued to bolster, but this has not yet translated into robust nominal wage growth, noted Westpac. Even if wage growth is subdued at present, it is likely to rise in the coming year, in line with growth in economic activity and increasing consumer price inflation. But the extent of any wage rises might be modest for some time.

The labor market data released today might be just a modes surprise for the Reserve Bank of New Zealand. The jobs growth figures were stronger than expectations in February when the central bank released their most recent policy statement. But jobless rate and wage growth were consistent with their forecasts, added Westpac.

Following the release of the data, the NZD/USD pair was up 0.2 percentage points.