Some comments from around the NZ banks on the data today (let alone the surge in dairy prices at the auction overnight)
Employment report:
ASB:
- Headline jobs growth figures appeared to be very strong
- Cautioned on changes in the Stats NZ Household Labour Force Survey meant the figures should be treated with caution
- "There are no indications in the labour market results that reinforce the need for further OCR cuts beyond next week, though the RBNZ will downplay the apparent strength of the employment/unemployment figures given ongoing question marks about their reliability"
Kiwibank:
- Jobs growth remarkably strong
- But noted also the lack of a pick up in wage inflation
- "From an inflation point of view, what remains missing in this story of a tightening labour market is a notable pick up in wage growth. The rapid rise in the labour force participation rate - influenced by current record net migration - suggest that rising labour supply is keeping downward pressure on wage growth"
Westpac:
- Labour market clearly continued to strengthen
- But this not yet having an impact on nominal wages
- "Coming in conjunction with this morning's stonking rise in dairy prices, this means the economy is probably on a firmer footing than the Bank anticipated at its last Momentary Policy Statement. However, there will be lingering concerns about the lack of wage growth and the impact of this on the inflation outlook"
Inflation Expectations report:
Kiwibank:
- Have changed their call from expecting a rate cut on November 10 and again in February to only expecting the November cut then no more
- Then expect the RBNZ to remain on hold "for an extended period"
- RBNZ likely to change the September OCR Review language from 'further easing will be required' to 'further easing may be required'
- There remain risks that could bring on further RBNZ easing though; in coming months; US election outcome, market reaction if/when the Fed lifts interest rates in December, the path of the NZD TWI, if international price pressures continue to rise"
ASB:
- RBNZ have been concerned that ongoing weakness in headline inflation would begin to drag inflation expectations lower
- but today's slight improvement will be a relief to the RBNZ
- Does not think today's result will have changed the RBNZ's near-term interest rate outlook
- Inflation expectations remain low
- Continue to expect the RBNZ to cut next week
