| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Employment- Q/Q | -0.5% | -0.6% to -0.5% | -0.5% | 0.4% | 0.2% |
| Employment -Y/Y | -0.4% | 0.6% | 0.3% | ||
| Unemployment Rate | 5.0% | 5.0% to 5.0% | 4.8% | 4.6% | |
| Labour Market Cost Index - Q/Q | 0.7% | 0.7% to 0.7% | 0.6% | 0.9% | |
| Labour Market Cost Index - Y/Y | 3.4% | 3.6% |
Highlights
New Zealand labour market statistics for the three months to September showed a fall in employment and a further increase in the unemployment rate from recent historic lows. Labour costs grew at a steady pace.
Employment rose 0.4 percent on the quarter in the three months to September after increasing 0.2 percent in the three months to June, while year-on-year growth slowed from an increase of 0.2 percent to a fall of 0.4 percent. The unemployment rate increased for the fifth consecutive quarter, rising from 4.6 percent to 4.8 percent, while the participation rate fellfrom 71.7 percent to 71.2 percent.
Headline private sector wages growth moderated in the three months to September. The labour cost index rose 0.6 percent on the quarter, down from growth of 0.9 percent previously, while year-on-year growth in this index eased from 3.6 percent to 3.4 percent.
Employment rose 0.4 percent on the quarter in the three months to September after increasing 0.2 percent in the three months to June, while year-on-year growth slowed from an increase of 0.2 percent to a fall of 0.4 percent. The unemployment rate increased for the fifth consecutive quarter, rising from 4.6 percent to 4.8 percent, while the participation rate fellfrom 71.7 percent to 71.2 percent.
Headline private sector wages growth moderated in the three months to September. The labour cost index rose 0.6 percent on the quarter, down from growth of 0.9 percent previously, while year-on-year growth in this index eased from 3.6 percent to 3.4 percent.
Market Consensus Before Announcement
Economists see increasing slack in the employment market with the jobless rate rising to 5.0 percent in Q3 from 4.6 percent in Q2. Slow growth in employment is seen turning to actual losses in Q3 with the employment index down 0.5 percent after rising 0.4 percent in Q2. Employment cost increases are slowing too with the cost index seen up 0.7 percent on the quarter, down from 0.9 percent in Q2.
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.
