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ASB Economics: Q2 labour market report


  • Employment growth was weaker than expected, lifting by only 0.3% over the June quarter.
  • Wage inflation was modest, as expected. But near-zero CPI inflation means real wage growth remains   quite high.
  • These data reinforce our expectation that the RBNZ cuts the OCR at least two more times this year.

Employment growth was weaker than expected, and wage inflation was modest: the LCI measure of wage inflation for all sectors (incl. overtime) only rose 1.6% over the year. In order to achieve its inflation goal, we think the RBNZ needs to ease policy further, and continue to expect the OCR to be cut to 2.5% by October this year. The slack in the labour market and weak wage growth in today’s data reinforces this view.

The labour market situation is far from gloomy though: more people are employed in New Zealand than ever before. There were 7,000 more people employed over the second quarter. Employment is up 3% higher than a year ago, with 69,000 more people employed.

More details are in the attached pdf. 


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Guest Tuesday, 22 October 2019