The RatingDog PMI data follows official and their manufacturing PMIs earlier this week:
The NZ Q3 labour market data is due at 10:45am New Zealand time.
What’s expected
Forecasts range from 5.4% to 5.6%. The June quarter’s 5.6% was the highest since September 2015. Westpac expects employment to rise 0.5% and the rate to slip to 5.5%. ANZ expects employment up 0.3% and the rate unchanged at 5.6%. ANZ’s flat call rests on a rise in labour force participation absorbing the job gains. The RBNZ’s September forecast was 5.5%. Wage growth is expected to stay modest. Private-sector labour cost growth is forecast at around 2.1%, which economists describe as near a four-year low.
RBNZ implications
The RBNZ surprised markets on October 28 by holding the OCR at 2.75% on a 4:3 vote, when a 25bp hike had been almost fully priced. The majority pointed to softer than expected Q3 inflation, stable inflation expectations and subdued wage growth. That makes today’s wage figures especially relevant. Westpac still expects a hike on December 9 but says it is not a done deal, and lists today’s data as the first key input. ANZ also still forecasts a December move.
NZD implications
After the hold, AUD/NZD jumped to a cycle high around 1.26, with interest rate differentials weighing on the kiwi as the RBA turned more hawkish.
Participation is the swing factor. A rise could hold the headline rate steady even if jobs are growing.
There is also an election on Saturday, November 7. Policy expectations could shift if a Labour-led government looks likely, given its stated aim to restore the RBNZ’s dual mandate.
This article was written by Eamonn Sheridan at investinglive.com.
Source: Investing Live - Central Bank
