| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Employment- Q/Q | 0.4% | -0.2% | 1.0% | |
| Employment -Y/Y | 3.2% | 2.4% | 4.0% | 4.1% |
| Unemployment Rate | 3.9% | 3.9% | 3.6% | |
| Labour Market Cost Index - Q/Q | 0.8% | 1.1% | ||
| Labour Market Cost Index - Y/Y | 4.1% | 4.3% |
Highlights
New Zealand labour market statistics for the three months to September showed weaker conditions. Employment fell 0.2 percent on the quarter after a previous increase of 1.0 percent, while year-on-year growth slowed from 4.1 percent to 2.4 percent. The unemployment rate increased from 3.6 percent to 3.9 percent, while the participation rate fell from 72.4 percent, its highest level since the series was initiated in 1986, to 72.0 percent.
Headline private sector wages growth also moderated in the three months to September. The labour cost index rose 0.8 percent on the quarter, down from growth of 1.1 percent previously, while year-on-year growth in this index eased from 4.3 percent to 4.1 percent.
Headline private sector wages growth also moderated in the three months to September. The labour cost index rose 0.8 percent on the quarter, down from growth of 1.1 percent previously, while year-on-year growth in this index eased from 4.3 percent to 4.1 percent.
Market Consensus Before Announcement
Employment is expected to rise a quarterly 0.4 percent in the third quarter following a higher-than-expected 1.0 percent rise in the second quarter.
Definition
The Labour Cost Index (LCI) measures movements in base salary and ordinary time wage rates and overtime wage rates. The non-wage component measures cost changes including annual leave and statutory holidays; superannuation; ACC employer premiums; medical insurance; motor vehicles available for private use low interest loans. The LCI is a measure of the extent to which changes in businesses' input costs put pressure on the output prices they charge for goods and services.
Description
As a measure of labour cost, the LCI helps the Reserve Bank of New Zealand measure inflation. The RBNZ, with an inflation target range of 1 percent to 3 percent uses this index in addition to other price indices to measure possible pressures in consumer prices.
RBNZ officials are always on the lookout for the prospects of inflationary pressures. Wage pressures tend to percolate when economic activity is booming and the demand for labor is rising rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down. By tracking labor costs, investors can gain a sense of whether businesses will feel the need to raise prices. If wage inflation threatens, it's a good bet that interest rates will rise, bond and stock prices will fall.
RBNZ officials are always on the lookout for the prospects of inflationary pressures. Wage pressures tend to percolate when economic activity is booming and the demand for labor is rising rapidly. During economic downturns, wage pressures tend to be subdued because labor demand is down. By tracking labor costs, investors can gain a sense of whether businesses will feel the need to raise prices. If wage inflation threatens, it's a good bet that interest rates will rise, bond and stock prices will fall.
