New Zealand quarterly employment report overview
Early Wednesday in Asia, at 21:45 GMT Tuesday world over, the global market sees the quarterly employment data from the Statistics New Zealand. Despite rising calls for the RBNZ’s November rate cut, policymakers refrain from favoring such a move, which in turn highlights the third quarter (Q3) 2019 unemployment rate and employment change figures for the New Zealand dollar (NZD) traders. Additionally, participation rate and labor cost index are some other job indicators that are also up with the headline figures.
Market consensus favors an uptick in the unemployment rate to 4.1% from 3.9% with a likely 0.3% increase in employment change versus +0.8% prior. Further, the participation rate and labor cost index (QoQ) are both expected to weaken to 70.3% and 0.6% respectively from 70.4% and 0.8% priors.
Analysts at ANZ still support their forecast of a 25 basis points (bps) rate cut in November:
The big event today locally will be the Q3 labour market report, due at 10:45am. We’re expecting the unemployment rate to tick back up to 4.2%, and for annual wage growth to hold steady at 2.2%. The labour market lags the economic cycle and the data are notoriously volatile, but the market will look for some direction from the print, following the paring back in pricing for a November rate cut in recent weeks. We continue to expect a 25bp cut in November and an OCR of 0.25% by mid-2020 (with further cuts in February and May).
How could it affect the NZD/USD?
Given the mixed prints of headline economic data and comments from the Reserve Bank of New Zealand’s (RBNZ) policymakers that don’t support another rate cut, not to forget increasing trade optimism, a surprise uptick in employment will actually be a boost for the NZD/USD pair. However, the overall strength of the US dollar (USD) could keep the kiwi pair’s upside limited.
On the chart, pair’s pullback from 100-day Simple Moving Average (SMA) seems to drag the quote towards a 21-day SMA level of 0.6358 ahead of highlighting 0.6330 and 0.6300 rest-points. On the upside, a sustained break beyond 100-day SMA level of 0.6462 seems to push bulls towards August month high and 200-day SMA near 0.6590.
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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