New Zealand’s labor market slowed slightly in Q3 2024, with employment falling by 0.5% quarter-on-quarter (versus an expected 0.4% decline) and the unemployment rate rising from 4.6% to 4.8%.
The labor force participation rate also declined to 71.2% compared to 71.7% in the previous quarter. Furthermore, job gains last quarter were revised downward, from a 0.4% increase to just 0.2%.
Link to New Zealand CPI Report (Q3 2024)
Despite this, wage growth remained strong. The labor cost index rose 0.6% during the quarter, after rising 0.9% in the second quarter, with public sector wages showing strong growth of 0.9%.
Annual wage growth also remained strong, with average hourly earnings rising 3.9% to $41.98, comfortably outpacing consumer inflation of 2.2%. Public sector workers saw particularly impressive gains, with average hourly wages rising 5.1% to $49.59.
Market reactions
New Zealand dollar against major currencies: 5 minutes
Overlay of the New Zealand dollar against major currencies Chart by TradingView
The New Zealand dollar was range bound late in the US session but began moving higher less than an hour before the report.
The New Zealand dollar rose on the release of the report as traders reacted to rising labor costs and a lower-than-expected unemployment rate.
Easing, but still elevated, price pressures support the Reserve Bank of New Zealand’s recent signals to take the pill on interest rate cuts amid “calmer waters” following a 50 basis point rate cut last month.
The New Zealand dollar rose and held near its highs after the report until fresh drivers in the Asian session sparked fresh buying interest.