Fourth Quarter NZ Employment

6 February, 2019

We could have some volatility in NZD pairs coming up on Wednesday at 20:45 CET (or 14:45 CET) with the release of a series of unemployment data out of New Zealand.

If you aren’t a regular tracker of kiwi economic data, this is sort of the NZ version of the NFP, which comes out every quarter.

Employment Change

The key number the markets look at is employment change. Employment trends in New Zealand have been positive since late 2015, adding jobs virtually every quarter.

Consensus expectations are that employment will have increased 0.3% during the last three months of the year. This is just a bit below the long-term trend, although quite a bit lower than the unusually high number of +1.1% recorded in the third quarter.

Unemployment Rate

The unemployment rate has been moving down since the first quarter of 2017. Last time, it recorded well below what most economists deem structural level, coming in at 3.9%.

Expectations are for the number to pop back up to 4.1%, which would be the second lowest unemployment figure since the sub-prime crisis.

Currency Moves

Because of the dominance of New Zealand’s largest trade partner, the NZD typically trades in line with the larger southern nation because of arbitrage. So although this is important data, the impact on the currency might be a bit muted, even if the figures are significantly outside of expectations.

The NZD has been more biased to the upside than the AUD given the comparatively better economic data coming from the archipelago.


With the unemployment rate so low, the focus is going to be on wage inflation, and that requires addressing a couple of caveats.

Since New Zealand is in the southern hemisphere, its seasonal effects are reversed. Given their reliance on tourism and agriculture, we can expect unemployment to drop during the summer months of December to March. The period breaches the end of the fourth quarter and the entirety of the first quarter

This allows more movement between the underemployment rate (or underutilization rate, as it’s known officially) and the employment rate. People will usually take part-time jobs during the winter to tide them over to the summer when there are more labor opportunities and higher wages.

We could see the first part of that effect in this data, and it will likely be even more noticeable in the next release in April.

In the third quarter, wages grew by 1.8% annualized, which is still within the objectives of the RBNZ and isn’t seen as a threat to increasing inflation. However, analysts are likely to get nervous if this figure comes in significantly above 2.0%.

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