The Reserve Bank's seen as definitely putting interest rates on hold after the latest labour market figures from Statistics New Zealand have shown unemployment falling to 4% and annual wage growth hitting 2.6%.
The RBNZ's making its first interest rate call of the year next week (Wednesday) and the labour market results appear to all but confirm that it will leave the Official Cash Rate unchanged at 1%, where it has been since the 50 basis-point 'double cut' in August of last year.
And with the labour market continuing to appear firm, it's looking increasingly like that there will be no further interest rate cuts this year - although the coronavirus scare and how long-lasting the impact of that might be is a crucial factor.
The latest labour figures beat economists's forecasts of an unemployment rate of 4.2% and wage increases of 2.3%.
However, the economists' forecasts were based on the previous Stats NZ labour market figures, but these have been revised, with the September quarter unemployment rate now being shown as 4.1% down from the originally released 4.2%.
And the drop in unemployment was assisted by a fall in the labour force participation rate from 70.4% to 70.1% - with the participation rate dropping to its lowest level since 2017.
Ben Udy, Australia and New Zealand economist for Capital Economics said the decline in the unemployment rate "all but ensures that the RBNZ will keep rates on hold in February" and he thinks our central bank is "now done" cutting rates.
Udy said the "standout" in Wednesday's labour data was wage growth.
"The labour cost index rose by 0.7% q/q in Q4 following the 0.8% rise in Q3. That was enough to cause the annual pace of growth in labour costs to rise to 2.6% y/y, the fastest pace of growth in more than 10 years. The 16% increase in the minimum wage over the past two years has almost certainly played a role in supporting that pace of wage growth. But with the biggest percentage increases in the minimum wage now behind us, we suspect that wage growth is close to its peak."
The seasonally adjusted unemployment rate was 4.0% in the December 2019 quarter, down from 4.1% (revised) last quarter, Stats NZ said in its Wednesday release.
“The unemployment rate has largely been tracking down since late 2012, but has remained stable at around 4.0 percent throughout 2019,” labour market and household senior manager Sean Broughton said.
The fall in the unemployment rate this quarter reflected 3,000 fewer unemployed people, driven by 3,000 fewer unemployed women.
The unemployment rate for women dropped to 4.3% in the December 2019 quarter, down from 4.5% last quarter. For men, it was unchanged at 3.8%.
The seasonally adjusted employment rate fell to 67.3% in the December 2019 quarter, down from 67.5% last quarter.
For men, the employment rate fell slightly to 72.2%, down from 72.3% last quarter. For women, it fell to 62.5%, down from 63.0% last quarter.
In the December 2019 quarter, there were 1,000 more employed people, up to 2,648,000. This reflected a rise of 6,000 more employed men, which was offset by 5,000 fewer employed women.
The fall in the employment rate this quarter reflected the number of employed people (up 1,000) increasing at a slower rate than the working-age population (up 16,000).
The labour cost index (LCI) salary and wage rates (including overtime) increased 2.6% in the year to the December 2019 quarter. This is the largest increase since the June 2009 quarter, when it increased by 2.8%. Private sector wage growth was 2.4%.
Average ordinary time hourly earnings, as measured in the quarterly employment survey (QES), increased by 3.6% over the year to reach $32.76.
Average weekly earnings (including overtime) for full-time equivalent employees (FTEs) in the QES also increased – up 3.6% over the year to the December 2019 quarter to reach $1,272.12.
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https://www.stats.govt.nz/information-releases/labour-market-statistics…
Public sector wages increased 3.3 percent, private sector wages increased 2.4 percent.
Biggest sector increase in employment: public administration and safety – up 5,900 (5.3 percent).
This government really knows how to pay public servants lots of money to do very little.
Maybe for skilled and high-skilled workers who already enjoy a decent increase in wages. However, the public sector wouldn't exactly give the private sector a run for their tourism, retail and hospitality workers, who are stuck at the bottom end of the wage table, both in absolute and growth terms.
Sure, as compared to Auckland and other more productive regions where councils are highly-efficient in building and managing their finances and infrastructure.
Shouldn't we all learn from the Auckland council on how to run a rapidly-growing urban area (into the ground)?
Maybe Auckland would be better placed to deal with some of this if the government could enact some of the reforms they campaigned on during the last election? The Greens sure were concerned about LGWM but I can't remember the last time any of them had anything to say about Light Rail in Auckland. Perhaps some of that economic potential could be freed up if government stopped using Aucklanders as an ATM to underwrite their pork barrelling in other regions - but then again there's apparently a giant void between Upper Hutt and Marsden Pt and nothing in-between matters.
Election? The Greens? enact some of the reforms? pork barrelling in other regions?
You realise that your comment has nothing to do with public sector workers who, FYI, are not the same as MPs. The main argument was about highly-paid government workers, not elected officials. Try to keep up.
Try to keep up? Maybe check which comment I am replying to. Your comment that I was actually replying to was about the Council 'running Auckland into the ground'. Auckland's biggest problem is Wellington's meddling - has been for decades. I am also perfectly aware that MPs are not 'public sector workers', but I am also aware that the people who staff the ministries that take forever to churn out a business case tend to be public sector workers. And I'm also pointing out that certain MPs conveniently intervene when they see a chance to influence Wellington projects, but are happy for Auckland to languish in a congested mess while jamming more and more people in after campaigning on immigration reform. Maybe next time take a deep breath instead of letting your urge to be snarky run away with you.
You may not be aware of this xingmowang, but we do have a thriving film industry here in Wellington that make millions of dollars each year, so at least it can justify being expensive. But it's actually Auckland that remains more expensive then Welligton, in terms of cost of living for rent and housing, now how can Auckland justify being more expensive then Wellington with a much weaker economy?
https://tin100.com/2019-tin-report-press-release/
Everything else requires you to cough up $350 or more for a report.
Auckland only really has one economy and that's its property market which is stagnating, most tech businesses moved down to Wellington since they were squeezed out by the high cost of living in AKL. So if you look at the actual figures you'll find that Auckland isn't doing that well GDP wise and high immigration keeps wages down in AKL. Here look for yourself: https://www.interest.co.nz/opinion/101984/kiwibank-economist-jeremy-cou….
Brisbane is Australia's Hamilton? Really? Metropolitan Brisbane has 2.45 million people. Gold Coast 550,000, Sunshine Coast 350,000 and Tweed Heads 650,000 are all really part of the greater city so if the greater Auckland region has 1.4 million then greater Brisbane has 3.9 million It is the capital of a state with a greater population than New Zealand, has substantially high wages, productivity etc etc. I live in a provincial city in Queensland comparable to Hamilton e.g agricultural hub, center of regional administration etc. Housing is far cheaper, incomes higher and overall cost of living lower than Hamilton.
I have been unemployed since 2014 of my own choice.Not registered so receive no helping hand from Govt.
As such i am not in the statistics.
Not a wealthy person but at my age i wasn't prepared to do the labouring jobs that i was offered after being made redunndant from an SOE, so have been living off my wifes small wages as well as diminishing returns from some investments.
Only 18 months till Jacinda gives me a hand out/hand up.
Those who have given up looking for work is a huge problem in the U.S. In Japan, there really is a dire shortage of workers. When I was there 5 months ago, many seniors working front counter at Maccas. This in a country where age discrimination kept them out of those jobs for a long time. Lovely people too, Made an effort to communicate with me in English when the younger staff would just clam up.
Have you forgotten about the convention center burning down because a guy sealing the roof set it alight. They could have used a fire watch. If anything NZ is underdone in terms of effective health and safety. For a country with the population of a medium sized city NZ has a terrible record. We have one the highest work place related death and injury rates in the OECD. Then add Cave creek, pike river, CTV and Pine Gould collapses, and White Island. These disasters were all the product of a disregard for safety. Tangiwai, Whahine and Erebus could be added to that list.
That's a pity. NZ is crying out for workers, and if you are experienced you can help a lot with guiding younguns as they come into the labour market and help them build their lives. Even if you just work part time it still helps you and the country. Also for every kiwi that doesn't work we have to import someone to do the job they would otherwise be doing.
Ben Udy of Capital Economics says the RBNZ is done cutting.on the basis of some unemployment data, which Stats NZ will continue to modify dependent on population numbers and demography. . Is that the same Ben Udy who just last decade or 3 months ago wrote, that the RBNZ was going to cut and cut
https://www.capitaleconomics.com/clients/publications/australia-new-zea…
Everyone is entitled to change their forecasts , but based on unemployment data ?
Continued low unemployment is great. But less good is since coalition came to power:
A 22% increase in those on a jobseeker benefit
16,000 more people who have been on a benefit for over a year
A 30% increase in Maori and Pasifka jobseeker benefit levels
15,000 more children living in a benefit dependent household
Long term welfare dependency destroys lives.
Pay equity agreements making things fairer for female carers would be a key driver if the public rise as is the increased salary for social workers etc, all good investments in my view. Interestingly some privately run charities that work in the same space are going to the wall due to the increased salaries being expected or losing staff outright to the better resourced and higher paying public sector.
The headline unemployment figures are pretty misleading aren't they. Just 1000 more people employed yet 16,000 working age people moved into the "Not in the labour force" category. Maybe it is a sign we are doing well - they are so rich they no longer need to work. Or maybe it is because Labour are being softer on bludgers and not forcing them to pretend to look for a job. Either way, the employed as a percentage of working age population has actually decreased.
Smoke and mirrors , housing inflation continues to out pace by far any wage growth and savings continue to fall. Headline should read ...."wages have risen most in 10years while consumer indebtedness is highest in history and savings rate at the lowest". Consumer continues to push debt farther and farther into the future.
Wages increase by a small %, house prices go up by a multiple of that.
The increase in wages make it easier to own a home (and also gives you the confidence and illusion things are getting better), this puts more demand on the restricted supply, which within a short time pushes up the price of housing.
As long as there is a restriction on the supply of houses at the rate of demand, then any savings, eg an increase in wages, will get capitalised back into the price of housing.
And because borrowing can be leveraged, then house prices increase as a multiple of your wage increase.
Thus we get our house prices as some of the most expensive in the world relative to income.
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