Heh heh...and they say the ABS figures are volatile!
Following on from my post on Kiwi migration earlier in the week, the New Zealand Labour Force data showed unemployment in NZ apparently diving by an enormous margin from 6 per cent to just 5.3 per cent in just one quarter.
The market had expected unemployment to rise marginally to 6.1 per cent, as the economy struggles gamely to create enough jobs to absorb record levels of immigration.
Labour force drop-outs
At first blush, this was superficially a decent result, with the massive -0.7 per cent quarterly fall in the unemployment rate taking that measure to its lowest level since March 2009.
However, as more and more people fail to participate in the NZ labour market, the participation rate has fallen by fully -1 per cent over the year, after sinking for three quarters consecutively.
As other employment indicators and surveys had already hinted, employment growth jumped +0.9 per cent in the quarter to be up by +1.3 per cent over the year (which is less than half of the reported trend rate of jobs growth seen in Australia).
Meanwhile annual wages growth in NZ fell to its weakest level in nearly six years at just +1.5 per cent (as compared to +2.3 per cent in Asutralia).
Over the year there was a substantial lift of +26,800 persons employed in the 20-29 year old bracket, many of these naturally being in lower paid occupations, such as hospitality.
Overall it seems that the NZ labour market is mirroring many of the trends seen in Australia, with a headline rise in employment (and decline in the unemployment rate) masking a soft underlying labour market with an increasing amount of slack therein.
Notably by far and away the strongest sector of the labour market was construction in Auckland, with the city adding total employment of +23,800 over the year, another clear echo of Australian trends.
ASB noted that the seemingly good headline result painted an inconsistent picture of the NZ labour market and continues to forecast that the cash rate will be cut twice this year, with plenty of slack in the labour force likely to result in ongoing anaemic wages growth.
The RBNZ also expects to see muted wages growth over the year ahead.
Going back to the original point on demographoc trends, migration to NZ is still gonna drop off very sharply in time, but a decent quarter of employment growth could feasibly push things back by a month or three.