More banks cut OCR forecast to 3.4% after unemployment inches.

The unemployment rate moved in the opposite direction of the central bank's forecast.


The unemployment rate moved in the opposite direction of the central bank’s forecast.

The official unemployment rate rose to 3.4 percent in the December quarter, and wages do not appear to have risen as much as some economists had expected.

The slightly weaker-than-expected figures led the ASB and BNZ to join ANZ, Westpac and Kiwibank in cutting their expectations for a change in the central bank’s official cash rate on February 22, with all banks now targeting a 50 basis point increase. predict OCR, instead of increasing 75bp.

BNZ head of research Stephen Tapliss said he now expects the OCR, which is currently 4.25 per cent, to rise to 5 per cent this year instead of 5.5 per cent.

The rise in unemployment was small, from 3.3 percent in the September quarter, but it was in the opposite direction to what many banks and the central bank had expected, and it comes amid forecasts of a recession this year.

Read more:
* NZ unemployment expected to remain near record low despite wind chill
* Have you completed your work at the age of 55? The reality of aging despite the lack of labor
*Pain for workers ahead as companies cut jobs to “tighten belts.”

The central bank, ANZ and ASB had forecast the official unemployment rate to fall to 3.2%.

The central bank also indicated last week that it had overestimated likely inflation, when December quarter inflation was flat at 7.2 percent, down from the 7.5 percent forecast it made in November.

David White/case

Social Development Minister Carmel Seppoloni says the Ministry of Social Development must prepare for a projected increase in unemployment (video first published in October).

Stats NZ reported that the labor underutilization rate, a broader measure of underemployment in the economy, rose to 9.4 percent from 9 percent in the previous quarter.

However, it noted that this was mainly due to an increase in the proportion of people who said they were available for work, rather than an actual change in the proportion of people working or wanting to work more hours.


The official unemployment rate is based on the Stats NZ survey. To count, individuals must have been actively looking for work in the past four weeks.

The proportion of New Zealanders in employment remains at 69.3%, the highest recorded since it was first measured in 1986.

But ANZ said cracks in the labor market were starting to show.

Average typical hourly earnings rose 7.2 percent in the year to mid-October, according to quarterly employment survey data, down from a 7.4 percent annual growth in the previous quarter.

Becky Collett, director of labor and welfare statistics, noted that it was still the second highest jump since Stats NZ started the survey in 1986.

However, the reduction could be offset by the expected increase in OCR.

Average average hourly earnings in the private sector rose 8.1 percent to $36.43, significantly less than ANZ and the central bank’s forecast for a 9.1 percent jump.

Overall, wage growth was “a bit weaker than expected”, said Jeremy Couchman, chief economist at Kiwi Bank.

But he said there was still a chance it would peak in the current quarter, given the lag that often exists between inflation and payments.

The labor market remained relatively tight, he said, despite a slight drop in official unemployment.

The Labor Cost Index, an attempt by Stats NZ to measure labor quality-adjusted spending, but taken with a pinch of salt by ANZ, rose 4.1 per cent, up from a 3.7 per cent annual increase in the previous quarter.

Leave a Comment