On Monday, Stats NZ released data on filled jobs for August, which recorded a 0.2% monthly rise, in line with expectations.
However, as shown below by Justin Fabo from Antipodean Macro, the August data incorporated chunky historical revisions, which suggest a weaker labour market starting point.
The earlier reported 0.2% increase in July was revised down to a flat result, with the level of employment revised down by 0.8% compared to July.
Total eEmployment fell 0.1% in the three months to August, with jobs also 0.7% lower than 12-months prior. The level of employment is also around 2.0% below the March 2024 peak.
The following chart from major bank ASB shows that New Zealand’s youth have borne the brunt of job losses. Heavy annual declines were recorded for the 15-19 age bracket (-8.2% annually), with hiring down 3.0% annually for those aged 20-24 and down 3.5% annually for the 25-29 age group.
ASB forecasts gradual increases in employment in the period ahead, with “hiring data in recent months suggesting that employment conditions are stabilising”.
Even so, ASB has called on the Reserve Bank to deliver another 75 bp of interest rate cuts by year-end, which would lower the official cash rate to 2.25%, down from a peak of 5.50%.
“There is still significant spare capacity in the labour market, and it will take a concerted period of strong growth to push the unemployment rate down to the 4.0-4.5% Goldilocks zone”, ASB wrote.
“Given the lack of growth tailwinds apparent, we expect 75bp of OCR cuts and a 2.25% OCR by year-end as the RBNZ provides more economic support to the economy and broader labour market”.
