New Zealand’s labor market cooled off a bit in Q3 2024, with employment dipping 0.5% quarter-over-quarter (vs. 0.4% downtick expected) and the unemployment rate ticking up from 4.6% to 4.8%.
The labor force participation rate also slipped, coming in at 71.2% compared to 71.7% the previous quarter. On top of that, last quarter’s job gains were revised down, from a 0.4% increase to just 0.2%.
Link to New Zealand CPI Report (Q3 2024)
Despite this, wage growth remained robust. The labor cost index rose by 0.6% for the quarter, following a 0.9% bump in Q2, with public sector wages showing solid growth at 0.9%.
Annual wage growth stayed strong too, with average hourly earnings climbing 3.9% to $41.98, comfortably outpacing consumer inflation at 2.2%. Public sector workers saw particularly impressive gains, with average hourly pay up 5.1% to $49.59.
Market Reactions
New Zealand Dollar vs. Major Currencies: 5-min
Overlay of NZD vs. Major Currencies Chart by TradingView
The New Zealand dollar was range-bound in the late U.S. session but began moving higher less than an hour before the report dropped.
NZD spiked at the report’s release as traders reacted to stubbornly high labor costs and a lower-than-expected jobless rate.
Easing, yet still elevated, price pressures back up the RBNZ’s recent signals of taking a chill pill on rate cuts amidst ‘calmer waters’ after last month’s 50bps rate reduction.
NZD surged and held near its post-report highs until new drivers in the Asian session sparked fresh buying interest.
