| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Employment- Q/Q | 0.3% | -0.2% | 0.4% | |
| Employment -Y/Y | 1.7% | 1.2% | 2.4% | 2.7% |
| Unemployment Rate | 4.2% | 4.3% | 4.0% | |
| Labour Market Cost Index - Q/Q | 0.8% | 1.0% | ||
| Labour Market Cost Index - Y/Y | 3.8% | 3.9% |
Highlights
New Zealand labour market statistics for the three months to March showed a fall in employment and a further increase in the unemployment rate from recent historic lows. Labour costs grew at a slightly slower pace.
Employment fell 0.2 percent on the quarter in the three months to March after advancing 0.4 percent in the three months to December, while year-on-year growth slowed from 2.7 percent to 1.2 percent. The unemployment rate increased for the fourth consecutive quarter, rising from 4.0 percent to 4.3 percent, while the participation rate fell from 71.9 percent to 71.5 percent.
Headline private sector wages growth continued to moderate in year-over-year terms in the three months to March. The labour cost index rose 0.8 percent on the quarter, down from growth of 1.0 percent previously, while year-on-year growth in this index eased from 3.9 percent to 3.8 percent.
Employment fell 0.2 percent on the quarter in the three months to March after advancing 0.4 percent in the three months to December, while year-on-year growth slowed from 2.7 percent to 1.2 percent. The unemployment rate increased for the fourth consecutive quarter, rising from 4.0 percent to 4.3 percent, while the participation rate fell from 71.9 percent to 71.5 percent.
Headline private sector wages growth continued to moderate in year-over-year terms in the three months to March. The labour cost index rose 0.8 percent on the quarter, down from growth of 1.0 percent previously, while year-on-year growth in this index eased from 3.9 percent to 3.8 percent.
Market Consensus Before Announcement
Employment is expected to rise a quarterly 0.3 percent in the first quarter following 0.4 percent expansion in the fourth quarter. The unemployment rate is expected to climb to 4.2 percent from 4.0 percent.
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.
