New Zealand’s jobless rate likely to have dropped to 5.1 pct in Q1 2017 - ANZ

New Zealand’s March labor market data might give a strong picture overall. According to an ANZ research report, the fourth quarter’s unexpected figures might reverse partially, thus indicating towards a tightening labor market overall. Demand for labor continues to be strong in New Zealand. The ANZ job ads series has been on a rise in 14 out of the last 15 months, and has risen 18 percent year-on-year. However, the supply side is once again the major uncertainty. Companies are finding it quite difficult to find staff.

“We see employment growth holding at a similar pace to Q1 (0.8 percent q/q), consistent with quarterly GDP growth in Q1 of ~1 percent”, noted ANZ.

The working-age population rose 0.7 percent quarter-on-quarter, so the overall strength of labor supply would be determined by the participation rate. Also, further large gains in that are becoming more difficult. The jobless rate is expected to have dropped to 5.1 percent in the first quarter of 2017, according to ANZ.

Meanwhile, the conditions for stronger nominal wage growth are coming up. Real wage growth has been reasonably strong in recent times and is in line with a tighter labor market and reported skill shortages. However, given that the headline inflation is over 2 percent, nominal wage growth would be required to accelerate to make sure the real wage gains are not reversed.