The fourth quarter (October - December) employment report is due at 2145 GMT

  • Unemployment rate: expected is 4.7%, prior was 4.6%
  • Employment change q/q: expected 0.4%, prior was 2.2%
  • Employment change y/y: expected 3.6%, prior was 4.2%
  • Participation rate: expected 71.0%, prior was 71.1%
  • Average hourly earnings: expected 0.5%, prior was 1.2%
  • Private wages including overtime: expected 0.5%, prior was 0.7%
  • Private wages excluding overtime: expected 0.5%, prior was 0.7%

Previews (bolding mine)

This via BNZ:

  • If anything domestically might rock thoughts on Thursday's MPS, it will have to be Wednesday's Q4 labour market data. But even then it would take clear directional shock, given how volatile and mixed-message these data can be from quarter to quarter.
  • With this in mind, we are picking a slight drop in the unemployment rate, to 4.5%, while the market's median expectation is for a marginal increase, to 4.7%.
  • The Household Labour Force Survey's employment measure will need to be judged in the context of its outrageously strong 2.2% lift in Q3. The market is looking for a 0.3% increase in Q4.
  • We are holding our breath for a 0.4% gain (3.7% y/y), while realising it could fall on technical grounds alone, given how big this employment measure was in Q3.
  • On the Q4 wage figures the thing to note is that quarterly inflation is likely to slow, as Q3 was boosted by the pay equity settlement for government funded care workers. So we expect the private Labour Cost Index, for example, to expand 0.5% in the December quarter, having accelerated to 0.7% in Q3. Still, this would nudge its annual pace to 2.0%, from 1.9%. This, in turn, infers annual inflation of around 3.5% in the adjusted LCI, which we think better represents the rate of nominal wage and salary inflation.

This via ASB:

  • We expect a 0.3% qoq fall in Q4 employment from the Household Labour Force Survey (HLFS). We would view such an outcome as statistical recoil in light of the 2.2% qoq Q3 increase, rather than signalling a sharp slowdown in the demand for labour.
  • A small fall is also expected for the labour force participation rate, which should cap the unemployment rate at 4.7%, its second-lowest level since 2008.
  • Other metrics should depict a still-tight labour market, with elevated levels of labour utilisation.
  • Following the pay-equity settlement and minimum-wage generated lift in Q3, we expect a return to moderate quarterly increases for wages, with the private sector Labour Cost Index (LCI) wages up just 0.4% qoq (+1.9% yoy). Further pay-equity and minimum-wage increases, along with tight labour market capacity, are expected to gradually lift overall LCI wage inflation over the next few years.
  • Given the low inflation starting point and considerable uncertainties over the outlook for inflation, the RBNZ is expected to sit tight for a while yet. Over time, the tight labour market backdrop and pressures on capacity should help lift domestically-generated inflation and push the OCR higher. However, there is still the risk that wages fail to firm, which along with a backdrop of low headline CPI inflation and inflation expectations mean that the risks of a lower OCR should not be overlooked.