New Zealand quarterly employment report overview
Early Wednesday in Asia, at 22:45 GMT Tuesday the world over, the global market sees the second-quarter (Q2) 2021 employment data from the Statistics New Zealand.
Considering New Zealand’s (NZ) ability to tame the coronavirus outbreak at home, also keeping it safe from the global Delta covid variant, joins firmer economics and heating property prices to push the Reserve Bank of New Zealand (RBNZ) towards a rate hike in late 2021. Also amplifying the concerns was the Reserve Bank of Australia’s (RBA) latest hawkish title. Hence, today’s NZ jobs report will be the key for RBNZ hawks.
Market consensus suggests a reduction in the headline Unemployment Rate to 4.5% from 4.7% and a firmer Employment Change figure of 0.7% versus 0.6% previous readouts. Further, the Participation Rate may also inch up from 70.4% to 70.6%, per forecasts.
Ahead of the data, TD Securities said,
We expect NZ's unemployment rate to fall to 4.3% in Q2 from 4.7% in Q1, which is more optimistic than the street and RBNZ forecasts (market consensus: 4.4%, RBNZ's May MPS: 4.7%). Employment growth likely rose 0.9% q/q (Q1:0.6%) as Stats NZ's monthly employment indicator shows filled jobs rose strongly by 1.7% q/q at the end of Q2. From the Q2 NZIER survey, the skilled labor shortage is the most acute since the series began, pointing to further wage pressures in the private sector. Accordingly, we expect wages to rise by 0.8% q/q, 2.1% y/y (market forecast: 0.7%, 2.0% y/y). A strong Q2 labor market outcome should confirm our call for the RBNZ to begin policy normalization at the Aug meeting.
On the same line, FXStreet’s Dhwani Mehta said,
Upbeat fundamentals and the central bank’s efforts to curb the hot property market combined with higher inflation and improvement in the country’s labor market are likely to confirm the hawkish Reserve Bank of New Zealand (RBNZ) expectations. Economists at the country’s four largest banks expect the RBNZ to begin hiking rates in November.
How could it affect the NZD/USD?
NZD/USD edges higher past 0.7000, around 0.7015-20, ahead of the key NZ data during Wednesday’s Asian session. While mild optimism in the market, led by easing covid concerns in the West and amid stimulus hope, favor the bulls, the pre-data caution seems to limit the pair’s upside momentum of late.
The RBNZ’s move to alter lending terms for housing markets and the RBA’s readiness to keep the September tapering despite covid woes at home signal brighter chances of the New Zealand central bank to announce a rate hike during 2021. The optimists are likely to take clues from today’s NZ jobs report if matching/surpassing upbeat forecasts. However, the intermediate pullback can be expected in case of a negative surprise.
Technically, NZD/USD battles 200-day EMA around 0.7020 ahead of confronting a downward sloping trend line from June 15, near 0.7030. Even if the bulls manage to cross the 0.7030 hurdle, a confluence of 100-day and 200-day SMA, near 0.7100 will be the key to watch. On the contrary, failures to stay beyond 0.7000 may recall the bears targeting the 0.6920 horizontal support.
Key Notes
New Zealand Employment Preview: Upbeat jobs data to open RBNZ rate-hike door
NZD/USD bulls firm their grip into jobs report
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).
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