- Satish Ranchhod, senior economist at Westpac
New Zealand employment unexpectedly declined for the first time in three years in the July-September period, pushing up the jobless rate and sending the Kiwi Dollar lower. The New Zealand Dollar plunged more than 1% versus the US Dollar to trade at $0.6667 from $0.6704 before the data release. According to Statistics New Zealand, employment decreased 0.4% from the second quarter and the seasonally adjusted unemployment rate climbed to 6.0%. Some 11,000 fewer people were employed in the third quarter. Annual employment growth slowed to 1.5% in the third quarter, the weakest pace in more than two years. The construction sector was the main contributor to annual job growth, creating 20,500 jobs. Moreover, participation in the labour market plummeted 0.7 percentage points to 68.6%, hitting the lowest level since the second quarter of 2014. At the same time, wage growth slowed to 0.4% in the third quarter from 0.5% in the three months through June.
Economic growth has weakened due to a steep decline in dairy prices, which curbed farm incomes and dented business morale, while record immigration is keeping a lid on wages. The RBNZ kept its official cash rate on hold last week, following three cuts, but said additional easing is likely to be required.
© Dukascopy Bank SA