The New Zealand economy unexpectedly lost jobs by 0.2% on a quarterly basis in the first quarter of 2024, raising the unemployment rate from 4.0% to 4.3% over the period.
The principal components revealed that the labor force participation rate fell from 71.9% to 71.5%, indicating that people may be losing confidence in the labor market. Meanwhile, the labor cost index fell from a 1.0% quarterly gain in the fourth quarter of 2023 to a 0.8% increase in the first quarter of this year.
- Employment change for Q1 2024: -0.2% QoQ (+0.3% expected, 0.4% previously)
- Unemployment rate for Q1 2024: 4.3% (4.3% expected, 4.0% previously)
- Labor force participation rate for Q1 2024: 71.5% (previously 71.9%)
- Labor cost index for the first quarter of 2024: 0.8% quarter-on-quarter (previously 1.0%)
Link to New Zealand's quarterly employment change
Market reactions
New Zealand dollar against major currencies: 5 minutes
Overlay of the Japanese Yen against the major currencies Chart by TradingView
The New Zealand dollar was somewhat bearish, except against the Australian dollar, a few hours before the actual jobs release due to risk-off flows during the previous session.
Weaker than expected headline employment change data sent the commodity currency lower, even as the unemployment rate came in line with expectations for an increase from 4.0% to 4.3% for the quarter.
The downbeat fundamental data, especially when it comes to wage inflation, has likely highlighted how cost pressures are affected by rising interest rates.
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