When is the New Zealand Q1 employment data and how could it affect NZD/USD?

New Zealand quarterly employment report overview

Early Wednesday in Asia, at 22:45 GMT Tuesday world over, the global market sees the quarterly employment data from Statistics New Zealand.

Despite including only a partial lockdown period, the first quarter (Q1) employment data will be the key for New Zealand dollar (NZD) traders as it will reflect the severity of job losses due to the coronavirus (COVID-19). It’s worth mentioning that the early indicators have been downbeat and the RBNZ stays ready to act. With the monetary policy meeting scheduled during next week, the data could offer an excuse for Mr. Orr and the company to sound dovish.

Market consensus favors an uptick in the unemployment rate to 4.3% from 4.0% with a likely -0.3% figures of employment change versus 0.0% prior. Further, the participation rate and labor cost index (QoQ) are both expected to weaken to 69.9% and 0.4% respectively from 70.1% and 0.6% priors.

Analysts at Westpac rely on early indicators to expect downbeat outcome:

Businesses are also shedding workers. Next Wednesday’s labor market report, covering the March quarter, will capture only a fraction of the lockdown period. We expect a small drop in employment for the March quarter, and a rise in the unemployment rate to 4.3%.  We expect a 0.5% increase in labor costs in the March quarter. That would take annual private-sector wage growth to 2.5%, the fastest pace since 2009. However, we already know that the labor market has taken a further step down in April, with the number of people on jobseeker benefits rising to 175,000, up sharply from 145,000 in March.

On the other hand, TD Securities mention the partial inclusion lockdown in its preview:

Markets are looking for an increase in the unemployment rate to 4.4% in 20Q1 from 4.0% in 19Q4. Employment is expected to fall by 0.2% q/q, while wages should rise by 0.5% q/q. New Zealand began it's level 4 nationwide lockdown on 25 March, so the full extent of the COVID-19 shock will not be reflected in employment data just yet.

How could it affect the NZD/USD?

With the recent comments from the Reserve Bank of New Zealand (RBNZ) citing no uniformity of the pandemic impact across the economy, the employment data will be closely watched for fresh impulse. The early indicators, namely the number of people on jobseeker benefits, recently surged and indicate the downbeat outcome. However, the period of the survey includes only a part of the lockdown and hence surprises can’t be ruled out. Hence, a mildly better than expected figures can offer additional short-term strength while the weak outcome might not refrain from extending the latest pullback.

On the chart, a confluence of 50-day SMA and an ascending trend line since March 23, 2020, seems to limit the pair’s immediate downside around 0.6035/40, a break of which can recall April 23 low of 0.5910. Meanwhile, buyers are less likely to be impressed unless witnessing a figure beyond April top of 0.6176.

Key Notes

New Zealand Employment Preview: A positive surprise?

NZD/USD pares early gains, turns flat near 0.6050

RBNZ sees some sectors more heavily affected, such as tourism – Reuters

About New Zealand unemployment rate and employment change

The quarterly report on New Zealand unemployment rate and employment change is being released by the Statistics New Zealand.

The unemployment rate is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand labor market. As a result, a rise leads to weaken the New Zealand economy. A decrease of the figure is seen as positive (or bullish) for the NZD, while an increase is seen as negative (or bearish).

On the other hand, employment change is a measure of the change in the number of employed people in New Zealand. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. A high reading is seen as positive (or bullish) for the NZ dollar, while a low reading is seen as negative (or bearish).