**RBNZ Policy Unmoved: NZ Jobs Data Recap**

Tecfai Editorial Team

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Post on Nov 06, 2024

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RBNZ Policy Unmoved: NZ Jobs Data Recap

The Reserve Bank of New Zealand (RBNZ) maintained its current policy stance following the release of the latest employment data. Despite a slight uptick in unemployment, the overall picture remained relatively unchanged, suggesting that the RBNZ is likely to hold steady in the coming months.

Key Takeaways from the NZ Jobs Data:

• Unemployment Rate Ticked Up: The unemployment rate rose marginally to 3.3% in the June quarter, compared to 3.2% in the previous period. While a slight increase, this remains historically low, indicating a robust labor market.
• Job Growth Slows: The number of employed persons increased by 0.1% in the June quarter, a significant slowdown from the 0.9% growth seen in the March quarter. This suggests that the labor market may be cooling, but not dramatically.
• Wages Remain Elevated: Wage growth remained strong, with the average hourly earnings rising 3.8% year-on-year. This continues to put upward pressure on inflation, a key concern for the RBNZ.

RBNZ's Response:

Despite the slight increase in unemployment and the slowdown in job growth, the RBNZ remains focused on combating inflation. The current monetary policy stance, which includes an Official Cash Rate (OCR) of 5.5%, is designed to bring inflation back to the target range of 1-3%.

The central bank acknowledged the recent slowdown in job growth, but emphasized that the labor market remains tight. This suggests that the RBNZ sees this as a temporary blip rather than a sign of a broader economic slowdown.

Looking Ahead:

The next key economic indicator to watch will be the release of the Consumer Price Index (CPI) data, which will provide further insight into the inflation trajectory. While the RBNZ is likely to hold the OCR steady in the near term, the CPI data will be crucial in determining the bank's future course of action.

The RBNZ's focus on inflation control indicates that any future interest rate hikes will depend heavily on the inflation outlook. If inflation shows signs of persisting above the target range, the RBNZ may be forced to raise rates further. However, if inflation begins to moderate more significantly, a rate cut could become a possibility.

Conclusion:

The recent NZ jobs data suggests a slight cooling in the labor market, but overall the picture remains one of a strong economy. The RBNZ's focus remains on combatting inflation, and the upcoming CPI data will be closely watched for clues about the future direction of monetary policy. The RBNZ's stance suggests that the OCR will likely remain steady in the coming months, but the situation remains dynamic and further changes cannot be ruled out.